diff --git a/src/Connection.c b/src/Connection.c
index 14d0792..0e5b559 100644
--- a/src/Connection.c
+++ b/src/Connection.c
@@ -231,6 +231,25 @@ int LiStartConnection(PSERVER_INFORMATION serverInfo, PSTREAM_CONFIGURATION stre
     ListenerCallbacks.stageComplete(STAGE_NAME_RESOLUTION);
     Limelog("done\n");
 
+    // If STREAM_CFG_AUTO was requested, determine the streamingRemotely value
+    // now that we have resolved the target address and impose the video packet
+    // size cap if required.
+    if (StreamConfig.streamingRemotely == STREAM_CFG_AUTO) {
+        if (isPrivateNetworkAddress(&RemoteAddr)) {
+            StreamConfig.streamingRemotely = STREAM_CFG_LOCAL;
+        }
+        else {
+            StreamConfig.streamingRemotely = STREAM_CFG_REMOTE;
+
+            if (StreamConfig.packetSize > 1024) {
+                // Cap packet size at 1024 for remote streaming to avoid
+                // MTU problems and fragmentation.
+                Limelog("Packet size capped at 1KB for remote streaming\n");
+                StreamConfig.packetSize = 1024;
+            }
+        }
+    }
+
     Limelog("Starting RTSP handshake...");
     ListenerCallbacks.stageStarting(STAGE_RTSP_HANDSHAKE);
     err = performRtspHandshake();
diff --git a/src/Limelight.h b/src/Limelight.h
index d335576..b90d906 100644
--- a/src/Limelight.h
+++ b/src/Limelight.h
@@ -13,6 +13,11 @@ extern "C" {
 // Enable this definition during debugging to enable assertions
 //#define LC_DEBUG
 
+// Values for the 'streamingRemotely' field below
+#define STREAM_CFG_LOCAL   0
+#define STREAM_CFG_REMOTE  1
+#define STREAM_CFG_AUTO    2
+
 typedef struct _STREAM_CONFIGURATION {
     // Dimensions in pixels of the desired video stream
     int width;
@@ -24,11 +29,16 @@ typedef struct _STREAM_CONFIGURATION {
     // Bitrate of the desired video stream (audio adds another ~1 Mbps)
     int bitrate;
 
-    // Max video packet size in bytes (use 1024 if unsure)
+    // Max video packet size in bytes (use 1024 if unsure). If STREAM_CFG_AUTO
+    // determines the stream is remote (see below), it will cap this value at
+    // 1024 to avoid MTU-related issues like packet loss and fragmentation.
     int packetSize;
 
-    // Set to non-zero value to enable remote (over the Internet)
-    // streaming optimizations. If unsure, set to 0.
+    // Determines whether to enable remote (over the Internet)
+    // streaming optimizations. If unsure, set to STREAM_CFG_AUTO.
+    // STREAM_CFG_AUTO uses a heuristic (whether the target address is
+    // in the RFC 1918 address blocks) to decide whether the stream
+    // is remote or not.
     int streamingRemotely;
 
     // Specifies the channel configuration of the audio stream.
diff --git a/src/PlatformSockets.c b/src/PlatformSockets.c
index 67e7c7f..6d1d815 100644
--- a/src/PlatformSockets.c
+++ b/src/PlatformSockets.c
@@ -348,6 +348,33 @@ int resolveHostName(const char* host, int family, int tcpTestPort, struct sockad
 #endif
 }
 
+int isPrivateNetworkAddress(struct sockaddr_storage* address) {
+    unsigned int addr;
+
+    // We only count IPv4 addresses as possibly private for now
+    if (address->ss_family != AF_INET) {
+        return 0;
+    }
+
+    memcpy(&addr, &((struct sockaddr_in*)address)->sin_addr, sizeof(addr));
+    addr = htonl(addr);
+
+    // 10.0.0.0/8
+    if ((addr & 0xFF000000) == 0x0A000000) {
+        return 1;
+    }
+    // 172.16.0.0/12
+    else if ((addr & 0xFFF00000) == 0xAC100000) {
+        return 1;
+    }
+    // 192.168.0.0/16
+    else if ((addr & 0xFFFF0000) == 0xC0A80000) {
+        return 1;
+    }
+
+    return 0;
+}
+
 int initializePlatformSockets(void) {
 #if defined(LC_WINDOWS)
     WSADATA data;
diff --git a/src/PlatformSockets.h b/src/PlatformSockets.h
index e9176d1..56e46fa 100644
--- a/src/PlatformSockets.h
+++ b/src/PlatformSockets.h
@@ -81,3 +81,4 @@ void shutdownTcpSocket(SOCKET s);
 int setNonFatalRecvTimeoutMs(SOCKET s, int timeoutMs);
 void setRecvTimeout(SOCKET s, int timeoutSec);
 void closeSocket(SOCKET s);
+int isPrivateNetworkAddress(struct sockaddr_storage* address);
diff --git a/src/SdpGenerator.c b/src/SdpGenerator.c
index 45e235b..ca25060 100644
--- a/src/SdpGenerator.c
+++ b/src/SdpGenerator.c
@@ -176,6 +176,9 @@ static PSDP_OPTION getAttributesList(char*urlSafeAddr) {
     int audioChannelMask;
     int err;
 
+    // This must have been resolved to either local or remote by now
+    LC_ASSERT(StreamConfig.streamingRemotely != STREAM_CFG_AUTO);
+
     optionHead = NULL;
     err = 0;
 
@@ -259,7 +262,7 @@ static PSDP_OPTION getAttributesList(char*urlSafeAddr) {
         err |= addAttributeString(&optionHead, "x-nv-vqos[0].bw.maximumBitrateKbps", payloadStr);
     }
     else {
-        if (StreamConfig.streamingRemotely) {
+        if (StreamConfig.streamingRemotely == STREAM_CFG_REMOTE) {
             err |= addAttributeString(&optionHead, "x-nv-video[0].averageBitrate", "4");
             err |= addAttributeString(&optionHead, "x-nv-video[0].peakBitrate", "4");
         }
@@ -274,7 +277,7 @@ static PSDP_OPTION getAttributesList(char*urlSafeAddr) {
     
     err |= addAttributeString(&optionHead, "x-nv-vqos[0].videoQualityScoreUpdateTime", "5000");
 
-    if (StreamConfig.streamingRemotely) {
+    if (StreamConfig.streamingRemotely == STREAM_CFG_REMOTE) {
         err |= addAttributeString(&optionHead, "x-nv-vqos[0].qosTrafficType", "0");
         err |= addAttributeString(&optionHead, "x-nv-aqos.qosTrafficType", "0");
     }