A software application distributed as a virtual appliance is automatically installed, updated and removed in a virtual machine system running on top of a virtual machine monitor in a computer. The software application virtual appliance comprises a virtual disk, which is automatically detected and installed or removed at the customer by a virtual disk activation manager program, which executes scripts including commands through an API to the virtual machine monitor. The virtual appliance virtual disk is also created automatically by the software manufacturing using the virtual disk activation manager program. The virtual appliance virtual disk stores the binaries of the software application, a software package created by the software manufacturer using a software package tool, an installer to execute the software package, installation and un-installation scripts and a unique identifier which is a signature for the virtual machine virtual disk.