A server power manager and method for dynamic server power management are generally described herein. The server power manager is configured to implement one or more server management policies that identify target server power consumption and/or target functionality for the server system. The server power manager determines an amount of excess processing capability and/or an amount of excess physical memory based on the target server power consumption and the target functionality. The server power manager may transition a processor core to a lower-operational state when at least a predetermined amount of excess processing capability is determined while maintaining server system functionality. The server power manager may transition a memory module to a lower-operational state when at least a predetermined amount of excess physical memory is determined while maintaining the server system functionality.