The disclosure provides an approach for creating a pool of memory out of local memories of host machines, and providing that pool for the hosts to use. The pool is managed by a controller that keeps track of memory usage and allocated memory among hosts. The controller allocates or reclaims memory between hosts, as needed by the hosts. Memory allocated from a second host to a first host may then be divided into smaller portions by the first host, and further allocated to virtual machines executing within the first host.