Virtualization is a promising technology that has attracted much attention, particularly in the grid community. Recent advances using virtualization technologies enable multiplexing the physical resources by means of virtual machines resulting in better resource utilization. We have proposed Virtual Cluster Development Environment (VCDE) to dynamically form virtual cluster on demand providing the grid execution environment using Virtual machines. The formation of a grid environment to execute any MPI or sequential application has been automated by VCDE. The user can simply submit the job along with the requirements of hardware and software needed for the execution. The VCDE provides easy access to grid by reducing the burden of GT installation and other configurations. It is important to note that there is no human intervention in the preparation of virtual cluster as well as the grid environment. The Proposed VCDE uses virtualization technologies and it helps the user to make use of grid as easy as possible. © 2008 IEEE.