diff --git a/quantum/db/db_base_plugin_v2.py b/quantum/db/db_base_plugin_v2.py
index 4cdfe9b4e4..ed5bf238ff 100644
--- a/quantum/db/db_base_plugin_v2.py
+++ b/quantum/db/db_base_plugin_v2.py
@@ -693,12 +693,14 @@ class QuantumDbPluginV2(quantum_plugin_base_v2.QuantumPluginBaseV2):
             first_ip = net.first + 1
             last_ip = net.last - 1
             gw_ip = int(netaddr.IPAddress(subnet['gateway_ip'] or net.last))
-
-            if gw_ip > first_ip:
+            # Use the gw_ip to find a point for splitting allocation pools
+            # for this subnet
+            split_ip = min(max(gw_ip, net.first), net.last)
+            if split_ip > first_ip:
                 pools.append({'start': str(netaddr.IPAddress(first_ip)),
-                              'end': str(netaddr.IPAddress(gw_ip - 1))})
-            if gw_ip < last_ip:
-                pools.append({'start': str(netaddr.IPAddress(gw_ip + 1)),
+                              'end': str(netaddr.IPAddress(split_ip - 1))})
+            if split_ip < last_ip:
+                pools.append({'start': str(netaddr.IPAddress(split_ip + 1)),
                               'end': str(netaddr.IPAddress(last_ip))})
             # return auto-generated pools
             # no need to check for their validity
diff --git a/quantum/tests/unit/test_db_plugin.py b/quantum/tests/unit/test_db_plugin.py
index 0fcfcf732f..974bff768b 100644
--- a/quantum/tests/unit/test_db_plugin.py
+++ b/quantum/tests/unit/test_db_plugin.py
@@ -1663,7 +1663,7 @@ class TestNetworksV2(QuantumDbPluginV2TestCase):
 
 class TestSubnetsV2(QuantumDbPluginV2TestCase):
 
-    def _test_create_subnet(self, network=None, **kwargs):
+    def _test_create_subnet(self, network=None, expected=None, **kwargs):
         keys = kwargs.copy()
         keys.setdefault('cidr', '10.0.0.0/24')
         keys.setdefault('ip_version', 4)
@@ -1673,6 +1673,11 @@ class TestSubnetsV2(QuantumDbPluginV2TestCase):
             for k in keys:
                 self.assertIn(k, subnet['subnet'])
                 self.assertEquals(subnet['subnet'][k], keys[k])
+            # verify the configured validations are correct
+            if expected:
+                for k in expected:
+                    self.assertIn(k, subnet['subnet'])
+                    self.assertEquals(subnet['subnet'][k], expected[k])
             return subnet
 
     def test_create_subnet(self):
@@ -1871,6 +1876,36 @@ class TestSubnetsV2(QuantumDbPluginV2TestCase):
         self.assertEquals(subnet['subnet']['allocation_pools'],
                           allocation_pools)
 
+    def test_create_subnet_gw_values(self):
+        # Gateway not in subnet
+        gateway = '100.0.0.1'
+        cidr = '10.0.0.0/24'
+        allocation_pools = [{'start': '10.0.0.1',
+                             'end': '10.0.0.254'}]
+        expected = {'gateway_ip': gateway,
+                    'cidr': cidr,
+                    'allocation_pools': allocation_pools}
+        subnet = self._test_create_subnet(expected=expected,
+                                          gateway_ip=gateway)
+        # Gateway is last IP in range
+        gateway = '10.0.0.254'
+        allocation_pools = [{'start': '10.0.0.1',
+                             'end': '10.0.0.253'}]
+        expected = {'gateway_ip': gateway,
+                    'cidr': cidr,
+                    'allocation_pools': allocation_pools}
+        subnet = self._test_create_subnet(expected=expected,
+                                          gateway_ip=gateway)
+        # Gateway is first in subnet
+        gateway = '10.0.0.1'
+        allocation_pools = [{'start': '10.0.0.2',
+                             'end': '10.0.0.254'}]
+        expected = {'gateway_ip': gateway,
+                    'cidr': cidr,
+                    'allocation_pools': allocation_pools}
+        subnet = self._test_create_subnet(expected=expected,
+                                          gateway_ip=gateway)
+
     def test_create_subnet_with_allocation_pool(self):
         gateway_ip = '10.0.0.1'
         cidr = '10.0.0.0/24'