Methods and systems for improved performance in virtualized storage systems. Features and aspects hereof provide for a virtualization circuit integrated in each storage controller of a storage system. The virtualization circuit is operable to determine whether a request received from an attached host system will be processed locally by the receiving storage controller or will be processed by another storage controller of the storage system. If another storage controller is to process the request, the virtualization circuit is operable to transfer the request to the appropriate other storage controller. The virtualization circuit then receives result information from the other storage controller and returns such result information to the requesting host system. Integration of the virtualization circuit at below level of request processing of storage controllers improves performance of virtualization as compared to prior techniques.