The .VHD is nothing but a virtual PC Virtual Hard disk file type. This is a file that acts as a physical drive but is in fact just a logical replication of a hard disk. This file is generally used as a virtual machine hard disk to replicate the hard disks when operating systems are run as a part of a virtual machine.

The file structure of a .VHD files allows parallel existence of multiple operating systems on the machine.The file specification has now been made open by microsoft as a part of its open specification initiative.