Various embodiments of a system and method for managing virtual machines on a server computer are described. According to one embodiment of the method, a pool of free virtual machines may be maintained on the server computer, e.g., where the number of virtual machines in the pool is specified by an administrator. In response to receiving a request to assign a virtual machine to a first user, the server computer may assign a first virtual machine from the pool to the first user and add a new virtual machine to the pool to replace the first virtual machine. In some embodiments the server computer may be one of a plurality of server computers in a server computer system. An administrator may be able to configure different pool sizes for different server computers in the system through a central user interface.