A virtual drive data storage refactoring system includes a base drive and a plurality of virtual drives hierachly below the base drive. The virtual drives each include data storage blocks and a virtual drive controller system. The virtual drive controller system coordinates data storage on the drives by computing a signature for each data storage block, creating a list of data content for each data storage block that is sorted according to the signatures, locating the signatures for each data storage block that appear on each of the virtual drives, arranging data storage blocks on the virtual drives so that those having data content that is the same are located in corresponding locations on each of the virtual drives, and removing data storage blocks having data content that is the same from each of the virtual drives to a data storage drive that is hierarchly above the virtual drives.