—Server virtualization opens up a range of new possibilities for autonomic datacenter management, through the availability of new automation mechanisms that can be exploited to control and monitor tasks running within virtual machines. This offers not only new and more flexible control to the operator using a management console, but also more powerful and flexible autonomic control, through management software that maintains the system in a desired state in the face of changing workload and demand. This paper explores in particular the use of server virtualization technology in the autonomic management of data centers running a heterogeneous mix of workloads. We present a system that manages heterogeneous workloads to their performance goals and demonstrate its effectiveness via realsystem experiments and simulation. We also present some of the significant challenges to wider usage of virtual servers in autonomic datacenter management.