Over its two decades of science operations, the W.M. Keck Observatory computing environment has evolved to contain a distributed hybrid mix of hundreds of servers, desktops and laptops of multiple different hardware platforms, O/S versions and vintages. Supporting the growing computing capabilities to meet the observatory’s diverse, evolving computing demands within fixed budget constraints, presents many challenges. This paper describes the significant role that virtualization is playing in addressing these challenges while improving the level and quality of service as well as realizing significant savings across many cost areas. Starting in December 2012, the observatory embarked on an ambitious plan to incrementally test and deploy a migration to virtualized platforms to address a broad range of specific opportunities. Implementation to date has been surprisingly glitch free, progressing well and yielding tangible benefits much faster than many expected. We describe here the general approach, starting with the initial identification of some low hanging fruit which also provided opportunity to gain experience and build confidence among both the implementation team and the user community. We describe the range of challenges, opportunities and cost savings potential. Very significant among these was the substantial power savings which resulted in strong broad support for moving forward. We go on to describe the phasing plan, the evolving scalable architecture, some of the specific technical choices, as well as some of the individual technical issues encountered along the way. The phased implementation spans Windows and Unix servers for scientific, engineering and business operations, virtualized desktops for typical office users as well as more the more demanding graphics intensive CAD users. Other areas discussed in this paper include staff training, load balancing, redundancy, scalability, remote access, disaster readiness and recovery.