A method is disclosed for reducing network traffic. At a sender, a data chunk is identified for transmission to a receiver, which is connected to the sender over a communication link. The sender computes a signature of the data chunk and determines whether the data chunk has been previously transmitted by looking up the signature in a sender index table. The sender index table associates the signatures of previously transmitted data chunks with unique index values. A message is transmitted to the receiver, where if the data chunk has previously been transmitted then the message includes an index value from the sender index table that is associated with the signature of the data chunk. At the receiver, the data chunk is located in a receiver cache that stores the previously transmitted data chunks by looking up the index value included in the message in a receiver index table. The receiver index table associates the unique index values with the locations in the receiver cache of the previously transmitted data chunks.