A typical 65nm manufacturing process normally contains 400-500 process steps. Many factors in production line could cause production quality shift and/or drift. Especially, when a new process to include more functions in a die is under development, a higher failure rate will be encountered. As a result, frequent monitoring in both tool and process is required to detect the quality issue early so as to improve the process stability of semiconductor manufacturing. However, more tool and process monitoring means more metrology operation cost and longer cycle time. Recently, a promising technology denoted virtual metrology (VM) is blooming. VM can convert sampling inspection with metrology delay into real-time and on-line total inspection. Therefore, VM has now been designated by International SEMATECH Manufacturing Initiative (ISMI) and International Technology Roadmap for Semiconductors (ITRS) as one of the focus areas for the next generation factory realization roadmap of the semiconductor industry. The authors have developed the so-called automatic virtual metrology (AVM) system to implement and deploy the VM operations automatically. This paper proposes a novel manufacturing system that integrates AVM into the manufacturing execution system (MES). The interfaces among AVM, other MES components, and R2R (run-to-run) modules in the novel manufacturing system are also defined such that the capabilities of AVM can be accomplished. The AVM capabilities include 1) converting sampling inspection with metrology delay into real-time and on-line total inspection; 2) control/monitoring workpieces reduction/elimination; and 3) supporting wafer-to-wafer (W2W) advanced process control.