A system, method and program product for exploiting in-storage transparent compression. A storage infrastructure is disclosed that includes: a storage device having physical block address (PBA) storage of a defined capacity, a transparent compression system that compresses data written to the PBA storage, and a logical block address-to-physical block address mapping table; and a host having a memory management system that includes: an initialization system that allocates an amount of logical block address (LBA) storage for the host having a capacity greater than the defined capacity of the PBA storage, and that creates a dummy file that consumes LBA storage without consuming any PBA storage; a system that gathers current PBA and LBA usage information. The dummy file manager may adjust the size of the dummy file by truncating or appending sectors to the dummy file using a filesystem on the host, or using an allocation or deallocation function that does not incur any input/output (I/O) operations within the storage device. Dummy storage file sectors of the LBA storage may be mapped to dummy PBA storage that does not consume any physical storage in response to detecting a predefined content pattern indicative of dummy file sectors. The memory management system may device the LBA storage into partitions, with each partition receiving a dummy file.