Disclosed is a method and system for selectively restoring file-level data from a disk image backup. In embodiments, a virtual machine backup may be performed by dividing a virtual machine virtual disk file into a plurality of discrete fixed-sized data blocks sharing a common index file that is stored on a backup medium, such as a hard drive, to form a backup set. Upon restoration of data from the backup set, individual blocks of the data set are compared to corresponding blocks of the target virtual machine file. Redundant data and unchanged blocks are skipped, and only those block which have changed are restored to the target file. In this manner network bandwidth and processor resources are conserved, and replication times decreased.