In an emulated computing environment, a method is provided for licensing software of one or more guest computer systems. A license key server is provided in the host computer system for monitoring the initiation of unlicensed software, including operating system software, in the guest computer system. A determination is made by the license key server as to whether additional a license is available for each unlicensed software application. If a license is available, a license is granted and the count of available licenses is decremented. If a license is not available, a license is not granted and the unlicensed software application in the guest computer system is disabled.