In distributed service insertion, a single host has all service modules, kernel modules, and virtual machine implementations on a single physical machine. All components of the system interact with components within the physical host. This allows for faster module-to-module communication and compact deployment models. The same configuration can be replicated on physical systems in the network for scalability, while control and data plane traffic to and from the service modules to the vmkernel stay on the same physical system. During vMotion of the protected virtual machines, the partner security machine moves the virtual machine state from the source to the destination host.

Vendor solutions that make use of this type of service insertion include Intrusion Prevention Service (IPS)/Intrusion Detection Service (IDS), Firewall, Anti Virus, File Identity Monitoring (FIM), and Vulnerability Management.