Data deduplication in a virtualization environment

Techniques are described herein that are capable of optimizing (i.e., deduplicating) data in a virtualization environment. For example, optimization designations (a.k.a. deduplication designations) may be assigned to respective regions of a virtualized storage file. A virtualized storage file is a file that is configured to be mounted as a disk or a volume to provide a file system interface for accessing hosted files. In accordance with this example, each optimization designation indicates an extent to which the respective region is to be optimized (i.e., deduplicated). In another example, a virtualized storage file is mounted to provide a virtual disk that includes hosted files. In accordance with this example, optimization designations are assigned to the respective hosted files. In further accordance with this example, each optimization designation indicates an extent to which the respective hosted file is to be optimized.