How to configure Linux as Internet Gateway for small office

Step by Step Procedure

Step 1. Add 2 Network cards to the Linux box

Step 2. Verify the Network cards, check if they installed properly or not

Step 3. Configure eth0 for Internet with a Public (External network or Internet)
# cat ifcfg-eth0

DEVICE=eth0
BOOTPROTO=none
BROADCAST=xx.xx.xx.255    # Optional Entry
HWADDR=00:50:BA:88:72:D4    # Optional Entry
IPADDR=xx.xx.xx.xx
NETMASK=255.255.255.0    # Provided by the ISP
NETWORK=xx.xx.xx.0       # Optional
ONBOOT=yes
TYPE=Ethernet
USERCTL=no
IPV6INIT=no
PEERDNS=yes
GATEWAY=xx.xx.xx.1    # Provided by the ISP

Step 4. Configure eth1 for LAN with a Private IP (Internal private network)
# cat ifcfg-eth1

BOOTPROTO=none
PEERDNS=yes
HWADDR=00:50:8B:CF:9C:05    # Optional 
TYPE=Ethernet
IPV6INIT=no
DEVICE=eth1
NETMASK=255.255.0.0        # Specify based on your requirement
BROADCAST=""
IPADDR=192.168.1.1        # Gateway of the LAN
NETWORK=192.168.0.0        # Optional
USERCTL=no
ONBOOT=yes

 Step 5. Host Configuration    (Optional)
# cat /etc/hosts
    127.0.0.1       nat localhost.localdomain   localhost

Step 6. Gateway Configuration
# cat /etc/sysconfig/network

    NETWORKING=yes
    HOSTNAME=nat
    GATEWAY=xx.xx.xx.1    # Internet Gateway, provided by the ISP

Step 7. DNS Configuration
# cat /etc/resolv.conf

    nameserver 208.67.222.222      # Primary DNS Server provided by the ISP
    nameserver 208.67.220.220      # Secondary DNS Server provided by the ISP

Step 8. NAT configuration with IP Tables
First of all you have to flush and delete existing firewall rules. So flush rules by typing in terminal:

iptables -F
iptables -t nat -F
iptables -t mangle -F

Now delete these chains:

iptables -X
iptables -t nat -X
iptables -t mangle -X

# Set up IP FORWARDing and Masquerading

iptables -t nat -A POSTROUTING -o eth0 -j MASQUERADE
iptables -A FORWARD -i eth1 -j ACCEPT

# Enables packet forwarding by kernel (save this setting in /etc/sysctl.conf file)

echo 1 > /proc/sys/net/ipv4/ip_forward

 #Apply the configuration

service iptables save
service iptables restart

 # Check if iptables is set to start during boot up

chkconfig –list iptables

 Step 9. Testing
Ping the Gateway of the network from client system: ping 192.168.2.1
Try it on your client systems: ping google.com

Configuring PCs on the network (Clients)
All PC's on the private office network should set their "gateway" to be the local private network IP address of the Linux gateway computer. 
The DNS should be set to that of the ISP on the internet. 

Windows 2000, XP,  Configuration:
Select "Start" + Settings" + "Control Panel" 
Select the "Network" icon 
Select the tab "Configuration" and double click the component "TCP/IP" for the ethernet card. (NOT the TCP/IP -> Dial-Up Adapter) 

Read more: http://linuxpoison.blogspot.com/2009/02/how-to-configure-linux-as-internet.html#ixzz2b4wMEVQv