Cloud Computing is a collection of layers formed together to deliver a IP based computing, virtualization is a layer/module inside cloud computing architecture which will enable the providers to deliver the IaaS "Infrastructure as a Service" on the fly. Virtualization is a Software which creates “separated” multiple images of the hardware and software on the same machine. This makes possible to install multiple OS, multiple software and multiple applications on the same physical machine. Virtualization: More Servers on the Same Hardware; Cloud Computing: Measured Resources, Service based delivery, Pay for What You Use.