Content addressable storage (CAS) is a promising technology for improving storage efficiency as well as access throughput. Currently, many CAS products are implemented on the block level, which results in loss of file information. Thus, some sophisticated optimizations cannot be achieved, such as accurate file-prefetching. This paper presents a file-aware block-level storage system combined with the CAS function. In contrast with some existing file-level CAS, this system is transparent to upper-level applications, including the operating system and the file system. These features are achieved by using smart-disk technologies to help the storage system to learn the file-system layout. A prototype was implemented on an open-source vir-tual machine (VM) with the guest operating system being Windows XP. Tests show that this combination significantly reduces the size of the VM image file and improves the storage performance by discarding unused blocks and using a simple file-level prefetching strategy. Currently, many sophisticated products are implemented on the block level, which results in the loss of file information. Thus, some sophisticated optimizations can not be achieved, such This paper presents a file-aware block-level storage system combined with the CAS function. This contrasts with some existing file-level CAS, this system is transparent to upper-level applications, including the operating system and the file system. These features are achieved by using smart-disk technologies to help the storage system to learn the file-system layout. A prototype was implemented on an open-source vir-tual machine (VM) with the guest operating system being Windows XP . Tests show that this combination significantly reduces the size of the VM image file and improves the storage performance by discarding unused blocks and using a simple file-level prefetchi ng strategy.