Abstract: A method and system directed to improve effectiveness and efficiency of cache and data management by differentiating data based on certain attributes associated with the data and reducing the bottleneck to storage. The data-aware cache differentiates and manages data using a state machine having certain states. The data-aware cache may use data pattern and traffic statistics to retain frequently used data in cache longer by transitioning it into Sticky or StickyDirty states. The data-aware cache may also use content or application related attributes to differentiate and retain certain data in cache longer. Further, the data-aware cache may provide cache status and statistics information to a data-aware data flow manager, thus assisting data-aware data flow manager to determine which data to cache and which data to pipe directly through, or to switch cache policies dynamically, thus avoiding some of the overhead associated with caches.