In accordance with an embodiment, described herein is a system and method rule-based elasticity support in an application server environment. The method can begin with providing, at one or more computers, including an application server environment executing thereon, a plurality of deployable resources which can be used within the application server environment, one or more partitions, an administration server, the administration server comprising a diagnostic framework, a rules framework, and an elastic service manager, and a dynamic cluster for use by the one or more partitions. The method can continue with monitoring, by the diagnostic framework, metrics associated with the one or more partition and the dynamic cluster. The method can then trigger, by the rules framework, the action based upon a comparison between one of the one or more rules and the monitored metrics associated with the one or more partitions and the dynamic cluster.