diff --git a/kuryr/lib/segmentation_type_drivers/vlan.py b/kuryr/lib/segmentation_type_drivers/vlan.py
index 2fb7c291..6bfd8a92 100644
--- a/kuryr/lib/segmentation_type_drivers/vlan.py
+++ b/kuryr/lib/segmentation_type_drivers/vlan.py
@@ -9,11 +9,15 @@
 #    WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied. See the
 #    License for the specific language governing permissions and limitations
 #    under the License.
+import random
+
 from six import moves
 
 from kuryr.lib import constants as const
 from kuryr.lib import exceptions
 
+DEFAULT_MAX_RETRY_COUNT = 3
+
 
 class SegmentationDriver(object):
     def __init__(self):
@@ -22,12 +26,20 @@ class SegmentationDriver(object):
 
     def allocate_segmentation_id(self, allocated_ids=set()):
         self.available_local_vlans.difference_update(allocated_ids)
-        try:
-            allocated = self.available_local_vlans.pop()
-        except KeyError:
-            raise exceptions.segmentationIdAllocationFailure
-
-        return allocated
+        for i in range(DEFAULT_MAX_RETRY_COUNT):
+            try:
+                allocated = random.choice(list(self.available_local_vlans))
+                self.available_local_vlans.remove(allocated)
+                return allocated
+            except IndexError:
+                raise exceptions.SegmentationIdAllocationFailure('There are '
+                    'no vlan ids available.')
+            except KeyError:
+                # Other thread obtained the same vlan_id, so a new try is
+                # needed
+                continue
+        raise exceptions.SegmentationIdAllocationFailure('Max number of '
+            'retries reached without finding an available vlan id.')
 
     def release_segmentation_id(self, id):
         self.available_local_vlans.add(id)
diff --git a/kuryr/tests/unit/segmentation_type_drivers/__init__.py b/kuryr/tests/unit/segmentation_type_drivers/__init__.py
new file mode 100644
index 00000000..e69de29b
diff --git a/kuryr/tests/unit/segmentation_type_drivers/test_vlan.py b/kuryr/tests/unit/segmentation_type_drivers/test_vlan.py
new file mode 100644
index 00000000..15f0123b
--- /dev/null
+++ b/kuryr/tests/unit/segmentation_type_drivers/test_vlan.py
@@ -0,0 +1,99 @@
+# Copyright 2017 Red Hat, Inc.
+#
+# Licensed under the Apache License, Version 2.0 (the "License");
+# you may not use this file except in compliance with the License.
+# You may obtain a copy of the License at
+#
+#   http://www.apache.org/licenses/LICENSE-2.0
+#
+# Unless required by applicable law or agreed to in writing, software
+# distributed under the License is distributed on an "AS IS" BASIS,
+# WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+# See the License for the specific language governing permissions and
+# limitations under the License.
+
+import mock
+
+from oslo_config import cfg
+from six import moves
+
+from kuryr.lib import constants as const
+from kuryr.lib import exceptions
+from kuryr.tests.unit import base
+
+from kuryr.lib.segmentation_type_drivers import vlan
+
+
+class VlanSegmentationDriverTest(base.TestCase):
+    """Unit tests for VLAN segmentation driver."""
+
+    def setUp(self):
+        super(VlanSegmentationDriverTest, self).setUp()
+        cfg.CONF.binding.driver = 'kuryr.lib.binding.drivers.vlan'
+
+    def test_allocate_segmentation_id(self):
+        vlan_seg_driver = vlan.SegmentationDriver()
+        allocated_ids = set([1, 2, 3])
+
+        vlan_id = vlan_seg_driver.allocate_segmentation_id(allocated_ids)
+
+        self.assertNotIn(vlan_id, vlan_seg_driver.available_local_vlans)
+        self.assertNotIn(allocated_ids, vlan_seg_driver.available_local_vlans)
+
+    def test_allocate_segmentation_id_only_1_available(self):
+        vlan_seg_driver = vlan.SegmentationDriver()
+        allocated_ids = set(moves.range(const.MIN_VLAN_TAG,
+                                        const.MAX_VLAN_TAG + 1))
+        allocated_ids.remove(const.MAX_VLAN_TAG)
+
+        vlan_id = vlan_seg_driver.allocate_segmentation_id(allocated_ids)
+
+        self.assertNotIn(vlan_id, vlan_seg_driver.available_local_vlans)
+        self.assertNotIn(allocated_ids, vlan_seg_driver.available_local_vlans)
+        self.assertEqual(vlan_id, const.MAX_VLAN_TAG)
+
+    def test_allocate_segmentation_id_no_allocated_ids(self):
+        vlan_seg_driver = vlan.SegmentationDriver()
+        vlan_id = vlan_seg_driver.allocate_segmentation_id()
+        self.assertNotIn(vlan_id, vlan_seg_driver.available_local_vlans)
+
+    def test_allocate_segmentation_id_no_available_vlans(self):
+        vlan_seg_driver = vlan.SegmentationDriver()
+        allocated_ids = set(moves.range(const.MIN_VLAN_TAG,
+                                        const.MAX_VLAN_TAG + 1))
+
+        self.assertRaises(exceptions.SegmentationIdAllocationFailure,
+                          vlan_seg_driver.allocate_segmentation_id,
+                          allocated_ids)
+
+    @mock.patch('random.choice')
+    def test_allocate_segmentation_id_max_retries(self, mock_choice):
+        mock_choice.side_effect = [1, 1, 1]
+        vlan_seg_driver = vlan.SegmentationDriver()
+        allocated_ids = set([1, 2, 3])
+
+        self.assertRaises(exceptions.SegmentationIdAllocationFailure,
+                          vlan_seg_driver.allocate_segmentation_id,
+                          allocated_ids)
+        self.assertEqual(len(mock_choice.mock_calls), 3)
+
+    @mock.patch('random.choice')
+    def test_allocate_segmentation_id_2_retries(self, mock_choice):
+        vlan_seg_driver = vlan.SegmentationDriver()
+        vlan_seg_driver.available_local_vlans = set(moves.range(1, 10))
+        allocated_ids = set([1, 2, 3])
+        mock_choice.side_effect = [1, 1, 5]
+
+        vlan_id = vlan_seg_driver.allocate_segmentation_id(allocated_ids)
+
+        self.assertEqual(len(mock_choice.mock_calls), 3)
+        self.assertEqual(vlan_id, 5)
+
+    def test_release_segmentation_id(self):
+        vlan_seg_driver = vlan.SegmentationDriver()
+        vlan_seg_driver.available_local_vlans = set(moves.range(1, 10))
+        vlan_id = 20
+
+        vlan_seg_driver.release_segmentation_id(vlan_id)
+
+        self.assertIn(vlan_id, vlan_seg_driver.available_local_vlans)