When it comes to configuring DHCP, you have a number of ways to do it. You can run DHCP service on a Windows or a Linux box or as most networking professionals prefer, run it on an existing router or a switch.
The advantage of this is that you can leverage existing hardware, provide DHCP locally at each site and reduce the dependency on the WAN link.
To configure DHCP on a Cisco router or switch, follow these steps:
1. Configure an IP address on the router's Ethernet port
Router(config)# interface e0/0
Router(config-if)#ip address 172.16.1.1 255.255.255.0
Router(config-if)# no shut
2. Create a DHCP IP address pool for the IP addresses you want to use.
Router(config)# ip dhcp pool dhcppoolname
3. Specify the network and subnet for the addresses you want to use from the pool.
Router(dhcp-config)# network 172.16.1.0 255.255.255.0
4. Specify the DNS domain name for the clients.
5.Specify the DNS server.
6. Specify the defaut router (or default gateway)
7. Specify the lease duration.
8. Let's say that you've decided that all IP addresses between .30 and .40 will be used for static IP devices such as mail servers and database servers and you don't want them to be available in the DHCP pool, you can exclude them using "exclude-address" command:
Router(config)#ip dhcp excluded-address 172.16.1.30 172.16.1.40
Now any device that requires an DHCP address on the 172.16.1.0 network will be able to send a DHCP request to 172.16.1.1.