If you are setting up VNET-to-VNET connectivity between two virtual networks using http://msdn.microsoft.com/en-us/library/azure/dn690122.aspx, here is the summary of the process:

  1. Create VNET1 with address space 10.1.0.0/16
  2. Create VNET2 with address space 10.2.0.0/16
  3. Create LOCAL-VNET1 with address space 10.1.0.0/16
  4. Create LOCAL-VNET2 with address space 10.2.0.0/16
  5. Edit VNET1 to connect to LOCAL-VNET2
  6. Edit VNET2 to connect to LOCAL-VNET1
  7. Provision gateway on VNET1
  8. Provision gateway on VNET2
  9. Update LOCAL-VNET1 gateway address with the provisioned gateway address  of VNET1
  10. Update LOCAL-VNET2 gateway address with the provisioned gateway address of VNET2
  11. Set the IPsec/IKE key of the gateways of both VNET1 and VNET2 to the same value

Once the above process is complete, the network connectivity is established between VNET1 and VNET2. if you are doing this first time the documentation tells you (steps 3 and 4) to use a place holder IP address for the yet to be created gateway.

This placeholder can’t be any IP address from the private IP address spaces. Since this placeholder will be replaced with the gateway address created during steps 7 and 8, use anything (e.g. 25.345.131.1) that resembles a public IP address.

Note that the address spaces of VNET1 and VNET2 are mutually exclusive as these two VNETs will be combined into one logical address space after the connectivity is established.

Hope this helps to save a few minutes if you are doing this first time.

-Hanu