A memory scheduler in a hypervisor allocates physical memory to virtual machines (VMs) based on memory usages metrics generated within the VMs and provided to the hypervisor. More particularly, the memory scheduler determines an allocation target for each VM based on a guest-generated memory usage metric associated with the VM. The allocation target can be increased or decreased from its previous value to reflect changing needs in the VM. Physical memory is allocated when a VM requests it, and is reclaimed during a reclamation process based on its associated allocation target.