A system and method for dynamically producing virtual machines (VMs) across a plurality of servers in the virtual server environment is provided. A single VM request queue is produced comprising VM requests for producing the plurality of VMs. A processing thread is produced and assigned for each server and retrieves VM requests from the VM request queue and produces VMs only on the assigned server according to the retrieved VM requests. Each processing thread may be configured for retrieving VM requests and producing VMs without any programmed delays, whereby the rate at which a processing thread produces VMs on its assigned server is a function of the performance capabilities of the assigned server. This dynamic allocation of VMs based on such a “natural selection” technique may provide an appropriately balanced allocation of VMs based on the performance capabilities of each server in the virtual server environment.