VMWare has an included tool (vmware-vdiskmanager) for shrinking virtual disks. But before performing the shrink you need to zero out the unused disk space first. So start your VM and do a dd if=/dev/zero of=/empty_file; rm /empty_file After that, shut down the VM and start the vmware-vdiskmanager, which is located in /Applications/VMware Fusion.app/Contents/Library (OSX 10.7.2, VMware Fusion 4) an