The rapid growth of the Internet impacts ATM networks to be furnished IP handling capability. This paper discusses networking issues for IP and ATM integration. First, it considers function allocation at the boundary of an ATM backbone network and the Internet. As the result, the paper explains the necessity of built-in IP handling capability into an ATM switching system, and summarizes functional requirements for the system architecture. According to the discussion above, the authors propose the system architecture of the IP/ATM integration in the ATM switching system. The implementation of the proposed architecture is evaluated, and the wire-speed IP handling capability in the ATM switch is confirmed.