A system for space optimized backup repository grooming includes a backup converter and a primary backup repository comprising a first backup sequence including two or more backup images of a data source. Each backup image may be of a particular backup image type, such as a full image, a differential image, or an incremental image. Upon an occurrence of a triggering event, the backup converter may be configured to convert the first sequence of backup images into a second sequence of backup images by converting a particular backup image of the first sequence into a transformed backup image of a different backup type. The triggering event may, for example, be an expiration of an interval specified in a schedule, a reception of an administrative command, or a detection that a condition specified in a backup sequence conversion policy has been met.