This paper proposes Virtual Exclusion, an architectural technique to reduce leakage energy in the L2 caches for cache-coherent multiprocessor systems. This technique leverages two previously proposed circuits techniques — gated Vdd and drowsy cache, and proposes a low cost, easily implementable scheme for cache-coherent multiprocessor systems. The Virtual Exclusion scheme saves leakage energy by keeping the data portion of repetitive cache lines off in the large higher level caches while still manages to maintain Multi-Level Inclusion, an essential property for an efficient implementation of conventional cache coherence protocols. By exploiting the existing state information in the snoop-based cache coherence protocol, there is almost no extra hardware overhead associated with our scheme. In our experiments, the SPLASH-2 multiprocessor benchmark suite was correctly executed under the new Virtual Exclusion policy and showed an up to 72% savings of leakage energy (46% for SMP and 35% for multicore in L2 on average) over a baseline drowsy L2 cache.