—This paper presents a new scalable buffer-management scheme for IP Differentiated Services. The scheme consists of a Differentiated Random Drop (DRD) algorithm using feedback from a virtual scheduler. DRD choses a queue to perform an early packet drop to avoid congestion according to a specific probability function. First it will be shown that DRD in conjunction with first-come firstserved scheduling is able to support relative service differentiation. The virtual scheduler is introduced to enable service differentiation in terms of bandwidth and delay at the same time. A virtual scheduler runs in parallel to the real scheduler and maintains virtual queue lengths that are being used by the congestion avoidance scheme as a feedback for packet drop decisions. Scheduling packets for transmission is performed by the real scheduler only. Keywords— Quality-of-Service, Differentiated Services, Relative Service Differentiation, Bandwidth and Delay Guarantees