A general host-NIU pair, and various issues related to partitioning of a protocol software between the host machine and the intelligent Network Interface Unit (NIU) are discussed. A methodology to arrive at Optimal Protocol Partition, in a typical network node executing arbitrary protocol software is given. Analytical model is suggested to estimate the performance of the partitioned protocol stack, in a host-NIU pair. The implementation work carried out at IIT Madras, to understand the partitioning of the OSI protocol layers is described. OSInet, a networking software implementing a carefully chosen subset of ISO-OSI model for LANs, was used for this work. Significant improvement in the throughput of a network node was measured, due to proper partitioning of protocol software between a host machine and an intelligent NIU.