A method for deduplicating and managing data blocks within a file system includes adding a deduplication identifier to each pointer pointing to a data block to indicate whether the data block is deduplicated, detecting duplicate data blocks, determining whether one of the duplicate data blocks has been deduplicated, when detected, determining that one duplicate data block is a master copy when it is determined that one duplicate data block has been deduplicated, selecting one of the duplicate data blocks to be a master copy when it is determined that the duplicate data blocks have not been deduplicated, and setting the deduplication identifier of the selected duplicate data block to indicate deduplication, and determining that the other duplicate data block is a new duplicate data block and setting the deduplication identifier of the other duplicate data block to indicate deduplication and directing the respective pointer to the master copy.