A system and method for partial object dematerialization within a virtual machine (VM), and particularly Java Virtual Machines. In accordance with an embodiment, the system allows for applying partial object dematerialization to situations where the object is either created locally, or is retrieved from external code where it might have already escaped. In accordance with an embodiment, the system comprises a computer; a virtual machine for executing a software application; memory space for the application byte code and the generated machine code; and a compiler with an object dematerializer, and dematerializer injector. Runtime partial object dematerialization code is injected into the intermediate code representation in such a way that additional or standard optimizer techniques can be applied to it.