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Recent developments in transmission and switching technology has made available low-cost gigabit network capacity forpacket-based WANs (e.g., IP over WDM), that will not require the intermediate SONET/SDH multiplexing layer. For competitive operators that want to minimize their investment by deploying native IP over WDM networks, Circuit Emulation over IP gives support to the important class of legacy circuit-based equipment (e.g., T1/E1 multiplexers), which otherwise will require the deployment of an expensive telecommunication infrastructure, including SONET/SDH equipment. At the user interface, Circuit Emulation is required to maintain the same service of a circuit-based network, including synchronization and structured data delivery. In this paper we design the algorithm and the protocol that provide these two features. First, we identify the protocols and mechanisms used in the Internet and their ability tobe used for Circuit Emulation. Second, we address the problem of synchronization and we propose an algorithm for efficient source clock recovery and handling of delay variations. Finally, we show through simulations that Circuit Emulation over IP provides the needed service performance at the user interface.