System and method for conversion of virtual machine files without requiring copying of the virtual machine payload (data) from one location to another location. By eliminating this step, applicant's invention significantly enhances the efficiency of the conversion process. In one embodiment, a file system or storage system provides indirections to locations of data elements stored on a persistent storage media. A source virtual machine file includes hypervisor metadata (HM) data elements in one hypervisor file format, and virtual machine payload (VMP) data elements. The source virtual machine file is converted by transforming the HM data elements of the source file to create destination HM data elements in a destination hypervisor format different from the source hypervisor format; maintaining the locations of the VMP data elements stored on the persistent storage media constant during the conversion from source to destination file formats without reading or writing the VMP data elements; and creating indirections to reference the destination HM data elements in the destination hypervisor format and the existing stored VMP data elements.