Virtualized data centers became ubiquitous and led to invention of new delivery model called Cloud computing. Cloud service providers pursue high degree of automation for the management processes in order to make their services responsive and inexpensive. One of such critical processes is virtual machine provisioning. This article proposes and evaluates a provisioning model that leverages virtual machine image similarity to reduce the data volume transferred from the storage server to the hypervisor on which the virtual machine is being instantiated. We also present an analytical model of such a provisioning process for a single hypervisor shedding light on the impact of degree of image similarity, system utilization, and hypervisor capacity on the performance of the system. The model is validated using discrete event simulator. The algorithm has been implemented on a testbed system and also extensive simulations of virtualized server clusters were conducted. The proposed provisioning scheme can offer significant (up to 80%) reduction in data transfer between storage server and hypervisors thus significantly reducing provisioning time while also decreasing cost. © 2012 IEEE.