A system and method can support a flooding mechanism using a multicast group in a middleware machine environment. The middleware machine environment can comprise a gateway instance that includes an external port for receiving one or more data packets from an external network. The middleware machine environment also comprises one or more host servers, each of which is associated with one or more virtual machines that can process the data packets. Furthermore, said host servers can provide virtual interfaces that belong to a virtual hub associated with the gateway instance. At least one said packet is a flooded packet that is specified with an unknown destination address when it is received at the external port. The gateway instance operates to send the flooded packet to the multicast group that operates to forward the flooded packet to one or more said host servers in the multicast group.