diff -r a6133df55f3f tools/python/xen/lowlevel/xc/xc.c
--- a/tools/python/xen/lowlevel/xc/xc.c	Fri Dec 19 17:54:46 2008 +0000
+++ b/tools/python/xen/lowlevel/xc/xc.c	Fri Dec 19 17:55:08 2008 +0000
@@ -890,17 +890,20 @@
     int i;
 #endif
     char *image;
-    int memsize, vcpus = 1, acpi = 0, apic = 1;
+    int memsize, target=-1, vcpus = 1, acpi = 0, apic = 1;
 
     static char *kwd_list[] = { "domid",
-                                "memsize", "image", "vcpus", "acpi",
+                                "memsize", "image", "target", "vcpus", "acpi",
                                 "apic", NULL };
-    if ( !PyArg_ParseTupleAndKeywords(args, kwds, "iis|iii", kwd_list,
-                                      &dom, &memsize,
-                                      &image, &vcpus, &acpi, &apic) )
+    if ( !PyArg_ParseTupleAndKeywords(args, kwds, "iis|iiii", kwd_list,
+                                      &dom, &memsize, &image, &target, &vcpus,
+                                      &acpi, &apic) )
         return NULL;
 
-    if ( xc_hvm_build(self->xc_handle, dom, memsize, image) != 0 )
+    if ( target == -1 )
+        target = memsize;
+
+    if ( xc_hvm_build_target_mem(self->xc_handle, dom, memsize, target, image) != 0 )
         return pyxc_error_to_exception();
 
 #if !defined(__ia64__)
@@ -1329,6 +1332,24 @@
         return NULL;
 
     if (xc_domain_setmaxmem(self->xc_handle, dom, maxmem_kb) != 0)
+        return pyxc_error_to_exception();
+    
+    Py_INCREF(zero);
+    return zero;
+}
+
+static PyObject *pyxc_domain_set_target_mem(XcObject *self, PyObject *args)
+{
+    uint32_t dom;
+    unsigned int mem_kb, mem_pages;
+
+    if (!PyArg_ParseTuple(args, "ii", &dom, &mem_kb))
+        return NULL;
+
+    mem_pages = mem_kb / 4; 
+
+    if (xc_domain_memory_set_pod_target(self->xc_handle, dom, mem_pages,
+                                        NULL, NULL, NULL) != 0)
         return pyxc_error_to_exception();
     
     Py_INCREF(zero);
@@ -1815,6 +1836,14 @@
       " maxmem_kb [int]: .\n"
       "Returns: [int] 0 on success; -1 on error.\n" },
 
+    { "domain_set_target_mem", 
+      (PyCFunction)pyxc_domain_set_target_mem, 
+      METH_VARARGS, "\n"
+      "Set a domain's memory target\n"
+      " dom [int]: Identifier of domain.\n"
+      " mem_kb [int]: .\n"
+      "Returns: [int] 0 on success; -1 on error.\n" },
+
     { "domain_set_memmap_limit", 
       (PyCFunction)pyxc_domain_set_memmap_limit, 
       METH_VARARGS, "\n"
diff -r a6133df55f3f tools/python/xen/xend/XendDomainInfo.py
--- a/tools/python/xen/xend/XendDomainInfo.py	Fri Dec 19 17:54:46 2008 +0000
+++ b/tools/python/xen/xend/XendDomainInfo.py	Fri Dec 19 17:55:08 2008 +0000
@@ -1104,10 +1104,10 @@
                   self.info['name_label'], str(self.domid), target)
         
         MiB = 1024 * 1024
+        memory_cur = self.get_memory_dynamic_max() / MiB
 
         if self.domid == 0:
             dom0_min_mem = xoptions.get_dom0_min_mem()
-            memory_cur = self.get_memory_dynamic_max() / MiB
             if target < memory_cur and dom0_min_mem > target:
                 raise XendError("memory_dynamic_max too small")
 
@@ -1115,8 +1115,12 @@
         self._safe_set_memory('memory_dynamic_max', target * MiB)
 
         if self.domid >= 0:
+            if target > memory_cur:
+                balloon.free( (target-memory_cur)*1024 )
             self.storeVm("memory", target)
             self.storeDom("memory/target", target << 10)
+            xc.domain_set_target_mem(self.domid,
+                                     (target * 1024))
         xen.xend.XendDomain.instance().managed_config_save(self)
 
     def setMemoryMaximum(self, limit):
diff -r a6133df55f3f tools/python/xen/xend/image.py
--- a/tools/python/xen/xend/image.py	Fri Dec 19 17:54:46 2008 +0000
+++ b/tools/python/xen/xend/image.py	Fri Dec 19 17:55:08 2008 +0000
@@ -799,19 +799,22 @@
     def buildDomain(self):
         store_evtchn = self.vm.getStorePort()
 
+        memmax_mb = self.getRequiredMaximumReservation() / 1024
         mem_mb = self.getRequiredInitialReservation() / 1024
 
         log.debug("domid          = %d", self.vm.getDomid())
         log.debug("image          = %s", self.loader)
         log.debug("store_evtchn   = %d", store_evtchn)
-        log.debug("memsize        = %d", mem_mb)
+        log.debug("memsize        = %d", memmax_mb)
+        log.debug("target         = %d", mem_mb)
         log.debug("vcpus          = %d", self.vm.getVCpuCount())
         log.debug("acpi           = %d", self.acpi)
         log.debug("apic           = %d", self.apic)
 
         rc = xc.hvm_build(domid          = self.vm.getDomid(),
                           image          = self.loader,
-                          memsize        = mem_mb,
+                          memsize        = memmax_mb,
+                          target         = mem_mb,
                           vcpus          = self.vm.getVCpuCount(),
                           acpi           = self.acpi,
                           apic           = self.apic)