A virtual drive serves the same purpose as a hard drive does for a computer, except it does so for a virtual machine. The virtual drive is created by the virtualization manager by logically dividing and distributing space among one or more virtual machines. The virtual drive can be used to install virtual machine guest operating systems, applications and data. Virtual drive capacity depends on the base requirement and the underlying physical drive capacity. In storage virtualization, a virtual drive is a logically isolated storage drive on top of a storage area network.

A cloud-based storage solution that is installed in a drive on a local computer is also known as virtual drive.