Setting up a VPN-server on Amazon EC2

Amazon has recently announced the new Micro Instances in their Elastic Cloud service. A so called Micro Instance is a virtual machine with 620 MB main memory and CPU power in the area of an 1 GHz Opteron processor. The advantage of the Micro Instance is its low cost of only $0.02 per hour of operation (be advised, there are some additional costs for traffic and storage).

The EC2 Micro Instance is an ideal way to operate your own VPN-server, when you need it only a couple of hours per month. Let’s assume, that you want to use it for about 50 hours per month with around 10 GB of traffic, this means $1.00 for computation time + $1.50 for 15 GB of storage + $1.50 for 10 GB outgoing traffic. So for $4 this is quite a good offer. Granted, you can find commercial VPN providers for $5 per month, but it is more fun to do it yourself. In this article I will describe, how to setup an EC2 instance as a VPN-server.

I choose to setup a PPTP server. PPTP is not the most secure type of VPN, but it has the big advantage, that it is the most compatible. Nearly every OS is able to open a PPTP connection without additional software and this includes mobile devices like iPhones/iPads.

First, you need to choose a base image to boot in the Micro Instance. I have selected an 32-bit Ubuntu 10.04 server image. The AMI-ID of this image is ami-6c06f305. Start this image in a Micro Instance and log in with your SSH-key. For more details on these steps, refer to the AWS documentation.

Once you are logged in, you can install the pptp-daemon:

sudo aptitude install pptpd

Configuring the pptp-daemon is a breeze. First you to define an IP address range which will be used for connected clients. This can be any IP range, but keep in mind, if you want to avoid routing problems, choose a private IP range. Uncomment and modify 2 lines at the end of /etc/pptpd.conf:


With the above settings, the pptpd server will get the address and there are 8 possible client addresses to

It is also a good idea to specify the address of at least one DNS server. You can use the DNS server of amazon ( or the Google Public DNS. I choose the latter. Open the file /etc/ppp/pptpd-options and make sure it contains the following settings:


The last step for configuring the pptpd-daemon is to add a user account for the service:

echo "USERNAME pptpd PASSWORD *" | sudo tee -a /etc/ppp/chap-secrets

Replace USERNAME and PASSWORD with whatever credentials you like. It is possible to add as many users as you like.

Now restart the pptp-daemon:

sudo /etc/init.d/pptpd restart

It is already possible to open a PPTP-connection to the server, although no traffic will be forwarded to the Internet. We still need to enable packet forwarding and network address translation on the server.

To enable packet forwarding, uncomment the following line in /etc/sysctl.conf:


Now reload this config:

sudo sysctl -p

The last step is to enable network address translation:

sudo iptables -t nat -A POSTROUTING -o eth0 -j MASQUERADE

This setting is reset on every reboot, so make sure that you add the following line above exit 0 in the file /etc/rc.local:

iptables -t nat -A POSTROUTING -o eth0 -j MASQUERADE

Now the VPN server is fully functional. The only small problem is, that the server will get a new IP address every time you reboot it. I would recommend using a dynamic dns-provider to assign this machine a unique domain name. I am using DynDNS.

The ddclient is a great little tool to update the current IP address on a number of different dynamic DNS services. Installation is done as usual:

sudo aptitude install ddclient

Once installed, the configuration is done in the file /etc/ddclient.conf. It will already contain some usefull settings, because the installer will require you to enter some information about the DNS service you are using. In the end the configuration should look something like this:

use=web,, web-skip='IP Address'

Replace LOGINNAME, PASSWORD and with your own settings. The most important line is the one starting with use=. This defines that the registered IP-address is detected by DynDNS itself. This is neccessary, because the virtual machine is running with a private IP address.

That’s it! Now you have your own VPN-server up and running. Just start the instance in the AWS Management Console whenever you need it.


Here is a screenshot of the security groups setup I am using:

Update 2:

Please take a look at my follow up posting on how to connect to the VPN from an iOS or Android device.

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