Embodiments support instant forking of virtual machines (VMs) and state customization. A computing device initiates execution of a first group of services (e.g., identity-independent) in a first VM. A second VM is instantiated from the first VM. The second VM shares memory and storage with the first VM. The computing device customizes the second VM based on configuration data associated with the second VM. A second group of services (e.g., identity-dependent) starts executing on the second VM after configuring the identity of the second VM. Customizing the second VM includes configuring one or more identities of the second VM. In some embodiments, a domain identity is selected from a pool of previously-created identities and applied to the second VM, before bootup completes on the second VM.