Proportional fair bandwidth allocation in packet switches is a fundamental issue to provide quality of service (QoS) support in IP networks. In input-queued switches, packet-mode scheduling delivers all the segments of a packet contiguously from the input port to the output port, thus greatly simplifying the design of packet reassembly modules and yielding performance advantage over cell-mode scheduling under certain conditions [1]. One of the important issues of packet-mode scheduling is how to achieve fair bandwidth allocation among flows with different packet sizes. This paper presents an algorithm called packet-mode fair scheduling (pFS) that guarantees each flow a bandwidth proportional to its reservation regardless of the packet size distribution and the system load. Simulations show that our approach achieves good fairness as well as high throughput and low packet delay. Compared to algorithms without fairness mechanism, pFS yields significant performance improvement in terms of average packet delay when the traffic is heterogeneous. A hardware implementation is presented to show that the proposed algorithm has low complexity and the computation can be completed in a single clock cycle, which makes pFS applicable to high-speed switches.