diff --git a/tests/e2e/multicard/test_ep_etp.py b/tests/e2e/multicard/test_ep_etp.py
new file mode 100644
index 00000000000..0232b3871d7
--- /dev/null
+++ b/tests/e2e/multicard/test_ep_etp.py
@@ -0,0 +1,38 @@
+import os
+
+import pytest
+
+from tests.conftest import VllmRunner
+from tests.model_utils import check_outputs_equal
+
+
+@pytest.mark.skipif(os.getenv("VLLM_USE_V1") == "0",
+                    reason="ep is not supported on v0")
+@pytest.mark.parametrize("model_name", ["deepseek-ai/DeepSeek-V2-Lite-Chat"])
+def test_e2e_ep_etp_correctness(model_name):
+    example_prompts = [
+        "Hello, my name is",
+        "The president of the United States is",
+        "The capital of France is",
+        "The future of AI is",
+    ]
+    max_tokens = 5
+
+    with VllmRunner(model_name,
+                    tensor_parallel_size=2,
+                    additional_config={
+                        "expert_tensor_parallel_size": 2,
+                    }) as vllm_model:
+        etp_output = vllm_model.generate_greedy(example_prompts, max_tokens)
+
+    with VllmRunner(model_name,
+                    tensor_parallel_size=2,
+                    enable_expert_parallel=True) as vllm_model:
+        ep_output = vllm_model.generate_greedy(example_prompts, max_tokens)
+
+    check_outputs_equal(
+        outputs_0_lst=ep_output,
+        outputs_1_lst=etp_output,
+        name_0="ep_output",
+        name_1="etp_output",
+    )
diff --git a/vllm_ascend/distributed/parallel_state.py b/vllm_ascend/distributed/parallel_state.py
index 2778a6ef277..a056fa17fae 100644
--- a/vllm_ascend/distributed/parallel_state.py
+++ b/vllm_ascend/distributed/parallel_state.py
@@ -28,37 +28,34 @@ def model_parallel_initialized():
 def init_ascend_model_parallel(
     expert_parallel_size: int = 1,
     expert_tensor_parallel_size: int = 1,
-    world_size: Optional[int] = None,
     backend: Optional[str] = None,
 ):
     if model_parallel_initialized():
         return
     assert torch.distributed.is_initialized()
-    world_size = world_size or torch.distributed.get_world_size()
+    world_size = torch.distributed.get_world_size()
     backend = backend or torch.distributed.get_backend(
         get_world_group().device_group)
-    num_expert_parallel_groups = expert_tensor_parallel_size
-    num_expert_tensor_parallel_groups = expert_parallel_size
 
-    global _EP
-    group_ranks = []
-    for i in range(num_expert_parallel_groups):
-        ranks = list(range(i, world_size, num_expert_parallel_groups))
-        group_ranks.append(ranks)
+    # The layout of all ranks: ExternalDP * EP * ETP
+    # ExternalDP is the data parallel group that is not part of the model,
+    # every dp rank can generate independently (in verl integration).
+    all_ranks = torch.arange(world_size).reshape(-1, expert_parallel_size,
+                                                 expert_tensor_parallel_size)
 
+    global _EP
+    group_ranks = all_ranks.transpose(1,
+                                      2).view(-1,
+                                              expert_parallel_size).unbind(0)
+    group_ranks = [x.tolist() for x in group_ranks]
     _EP = init_model_parallel_group(group_ranks,
                                     get_world_group().local_rank,
                                     backend,
                                     group_name="ep")
 
-    group_ranks = []
     global _ETP
-    for i in range(num_expert_tensor_parallel_groups):
-        ranks = list(
-            range(i * expert_tensor_parallel_size,
-                  (i + 1) * expert_tensor_parallel_size))
-        group_ranks.append(ranks)
-
+    group_ranks = all_ranks.view(-1, expert_tensor_parallel_size).unbind(0)
+    group_ranks = [x.tolist() for x in group_ranks]
     _ETP = init_model_parallel_group(group_ranks,
                                      get_world_group().local_rank,
                                      backend,
diff --git a/vllm_ascend/worker/worker.py b/vllm_ascend/worker/worker.py
index bffc6a8de89..4d163abb872 100644
--- a/vllm_ascend/worker/worker.py
+++ b/vllm_ascend/worker/worker.py
@@ -554,7 +554,6 @@ def _init_worker_distributed_environment(
         init_ascend_model_parallel(
             parallel_config.expert_parallel_size,
             parallel_config.expert_tensor_parallel_size,
-            parallel_config.world_size_across_dp,
         )
         ensure_kv_transfer_initialized(vllm_config)
 
diff --git a/vllm_ascend/worker/worker_v1.py b/vllm_ascend/worker/worker_v1.py
index 6fe84a45808..5535be7e464 100644
--- a/vllm_ascend/worker/worker_v1.py
+++ b/vllm_ascend/worker/worker_v1.py
@@ -272,7 +272,6 @@ def _init_worker_distributed_environment(self) -> None:
         init_ascend_model_parallel(
             parallel_config.expert_parallel_size,
             parallel_config.expert_tensor_parallel_size,
-            parallel_config.world_size_across_dp,
         )
         ensure_kv_transfer_initialized(self.vllm_config)