A system and method for managing resources in a distributed computer system that includes at least one resource pool for a set of virtual machines (VMs) utilizes a set of desired individual VM-level resource settings that corresponds to target resource allocations for observed performance of an application running in the distributed computer system. The set of desired individual VM-level resource settings are determined by constructing a model for the observed application performance as a function of current VM-level resource allocations and then inverting the function to compute the target resource allocations in order to meet at least one user-defined service level objective (SLO). The set of desired individual VM-level resource settings are used to determine final RP-level resource settings for a resource pool to which the application belongs and final VM-level resource settings for the VMs running under the resource pool, which are then selectively applied.