The Internet Protocol Private Branch eXchange (IP PBX) is a server that has the same functionalities as the TDM PBX used in the traditional telephone network, such as call control, call signaling, authenticating registrations and authorizing callers.

It is a telephone switching component that resides in the private company or organization instead of the telephone company. An IP PBX is an essential component in VoIP systems and is also responsible for delivering services such as dial-tone and telephone conferencing. As shown the telephone company below, two terminals have to establish the connection through the IP PBX before they can communicate.