With the growing importance of in-memory data processing, cloud service providers have launched large memory virtual machine services to accommodate memory intensive workloads. Such large memory services using low volume scaled-up machines are far less cost-efficient than scaled-out services consisting of high volume commodity servers. By exploiting memory usage imbalance across cloud nodes, disaggregatedmemory can scale up the memory capacity for a virtual machine in a cost-effective way. Disaggregated memory allows availablememory in remote nodes to be used for the virtual machine requiring more memory than its locally available memory. It supports high performance with the faster direct memory while satisfying the memory capacity demand with the slower remote memory. This paper proposes a new hypervisor-integrated disaggregated memory systemfor cloud computing. The hypervisor-integrated design has several newcontributions in its disaggregated memory design and implementation. First, with the tight hypervisor integration, it investigates a new page management mechanism and policy tuned for disaggregated memory in virtualized systems. Second, it restructures the memorymanagement procedures and relieves the scalability concern for supporting large virtual machines. Third, exploiting page access records available to the hypervisor, it supports application-aware elastic block sizes for fetching remote memory pageswith different granularities. Depending on the degrees of spatial locality for different regions of memory in a virtual machine, the optimal block size for eachmemory region is dynamically selected. The experimental results with the implementation integrated to the KVMhypervisor, show that the disaggregated memory can provide on average 6 percent performance degradation compared to the ideal local-memory only machine, even though the direct memory capacity is only 50 percent of the total memory footprint.