The present invention is directed at a virtual machine environment operating on portable devices with limited resources. The virtual machine environment includes a method for managing dynamically generated code and data together in order to shift memory usage to/from generated code or data as needed. Each application domain manages several code pools and several garbage collection pools that are allocated from a system memory heap. When additional memory is not available for allocation from the system memory heap, garbage collection is performed until sufficient memory becomes available. During garbage collection, unreachable data in each garbage collection pool is cleared. The garbage collection process may further compact the garbage collection pools in order to empty one or more of the garbage collection pools. Still further, code pools may be released back to the system memory heap if the generated code is not associated with a current application domain, is executed infrequently, or is not associated with an instruction on a stack. Thus, memory may flow from data to code or vice versa as needed and among application domains.