The IT systems sent to satisfy their business functionalities and to provide good Quality of Service (QoS) parameters such as availability, scalability and performance. The failures are normal rather than exceptional in case of cloud computing. To improve system availability enhancing the system performance is an important factor. For that replicating the popular data to multiple sites is a best choice as the users can access the data from a nearby site. In this paper, we proposed a dynamic replication and placement algorithm to enhance the performance of the software system. We calculate popularity degree and replica factor to identify the suitable file to replicate. From this the most accessed file and the file need to be replicated is found and the replicate of the file is created. Then the proposed algorithm is used to place the replicas in the suitable location. We compare the performance of the technique with the existing technique.