A method of externally sorting large files in a computer system is presented. The contents of the input file to be sorted are investigated in order to identify presorted portions thereof. The presorted portions of the input file as thus identified are incorporated as sorted strings into an external sortwork file, by rearranging directory information rather than physically transferring data. If merging is necessary, the data may then be merged by a procedure wherein blocks of sorted data to be merged are incorporated into an output (sortout) file, by rearranging directory information rather than physically transferring sorted blocks to the sortout file. As a result of the process, portions of sorted data incorporated into the sortout file may physically remain in external storage space allocated to the input file, and/or in external space allocated to sortwork, thereby eliminating or reducing reading and writing from disk during sort-merge processing.