Abstract--We present a novel approach for joint optical network provisioning and Internet protocol (IP) traffic engineering, in which the IP and optical networks collaboratively optimize a combined objective of network performance and lightpath provisioning cost. We develop a framework for distributed multilayer optimization. Our framework is built upon the IP-over-optical (IPO) overlay model, where each network domain has a limited view of the other. Our formulation allows the two domains to communicate and coordinate their decisions through minimal information exchange. Our solution is based on a novel application of Generalized Bender's Decomposition, which divides a difficult global optimization problem into tractable subproblems, each solved by a different domain. The procedure is iterative and converges to the global optimum. We present case studies to demonstrate the efficiency and applicability of our approach in various networking scenarios. Our work builds a foundation f...