Generic Routing Encapsulation (GRE) is a tunneling protocol designed to encapsulate a wide variety of network layer packets inside IP tunneling packets. The original packet is the payload for the final packet. The protocol is used on the Internet to secure virtual private networks.
GRE was developed by Cisco and was designed to be stateless; the tunnel end-points do not monitor the state or availability of other tunnel end-points. This feature helps service providers support IP tunnels for clients, who won't know the service provider's internal tunneling architecture; and it gives clients the flexibility of reconfiguring their IP architectures without worrying about connectivity. GRE creates a virtual point-to-point link with routers at remote points on an IP internetwork.
One key difference between an encrypted GRE tunnel and an IPsec tunnel is the ability to make use of Multicast protocols over GRE tunnels. An example would be the use of OSPF over a GRE tunnel.
GRE uses IP protocol number 47.
Reference:
http://en.wikipedia.org/wiki/Generic_Routing_Encapsulation
