Understanding AWS NAT Instances – A Deep Dive with Real-World Setup

When working with AWS VPCs, one common networking requirement is to allow private subnet resources to access the internet securely without allowing inbound internet traffic. For this, AWS offers two primary options: NAT Instances and NAT Gateways.

While NAT Gateways are managed and scale automatically, NAT Instances offer a more customizable and cost-controlled approach, making them attractive for certain setups

In this post, I’ll share:

• What a NAT Instance is

• How it works

• How I set it up in my environment

• Pros and cons compared to NAT Gateway

• Best practices for production use

What is a NAT Instance?

"NAT" stands for Network Address Translation.

A NAT Instance is an Amazon EC2 instance configured to enable instances in a private subnet to connect to the internet, or other AWS services, but prevent the internet from initiating connections with those instances.

Architecture Overview

Here’s a simplified diagram of typical AWS NAT Instance architecture:

How Does a NAT Instance Work?

• Private instances have no direct route to the Internet Gateway.

• Their route table sends 0.0.0.0/0 traffic to the NAT Instance.

• The NAT Instance has:

  • Public IP (Elastic IP) for internet access.

  • Source/Destination Checks disabled (so it can route traffic).

• It performs SNAT (Source NAT):

  • Changes the source address of packets to its own public IP.

  • Receives responses from the internet.

  • Forwards them back to the private instance.

Why Use a NAT Instance Instead of NAT Gateway?

AWS provides NAT Gateway as a managed alternative. But there are reasons to choose NAT Instance:

My Real-World NAT Instance Setup

In my Project AWS environment (which includes Temporal, APISIX, Zitadel, PostgreSQL inside Kubernetes pods, etc.), I use a NAT Instance to allow:

• Pods in private subnets to pull OS/security updates.

• Private EC2 instances to reach internet APIs

Here’s my approach:

1️⃣ VPC Design

• One public subnet

• Multiple private subnets

• An Internet Gateway attached

2️⃣ NAT Instance Setup

• Launch an Amazon Linux 2 EC2 instance in the public subnet.

• Assign an Elastic IP.

• Disable Source/Destination Check:

• Add iptables rules if needed (e.g., to control outbound ports).

3️⃣ Routing

• In private subnet route table:

• Public subnet has direct route to Internet Gateway.

4️⃣ Security Groups

• NAT Instance:

  • Allow inbound SSH (restricted to my IP).

  • Allow all outbound.

  • Allow inbound from private subnet for forwarding.

Pros of Using NAT Instances in My Setup

• Cost: Very cheap for low/medium outbound traffic.

• Flexibility: Can install monitoring, custom firewall rules, logging.

• Control: Full EC2 control for patching and hardening.

Cons (and How I Manage Them)

• Scaling: Single instance can bottleneck. I use CloudWatch alarms to monitor.

• Maintenance: I need to patch the EC2 myself.

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Best Practices for Production

• Use a NAT Gateway if you need easy, multi-AZ HA and have higher budget.

• For NAT Instance:

  • Use latest Amazon Linux 2 NAT AMI.

  • Restrict inbound traffic via security groups.

  • Enable logging (e.g., iptables logs).

  • Use Auto Scaling Groups with health checks.

  • Monitor with CloudWatch.

AWS Reference

I recommend checking the official guide I also used:

👉 https://docs.aws.amazon.com/vpc/latest/userguide/work-with-nat-instances.html

It includes detailed steps, considerations, and best practices.

Final Thoughts

While AWS seems to encourage NAT Gateway as the default choice nowadays, NAT Instances remain powerful for small to medium deployments, cost-sensitive workloads, and setups that need customization.

If you’re comfortable managing EC2 instances and want to save on cost while retaining control, NAT Instance is an excellent choice.

If you’ve used a NAT Instance in your AWS projects or are thinking about it, I’d love to hear about your experience in the comments!