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This paper proposes a popularity based Quality of Service (QoS) aware smart replica management algorithm for content distribution in peer-to-peer overlay networks. Peer-to-peer overlay networks are a good solution for distributed computing than client-server model since nodes in P2P networks act both as client and server. With such functionality of managing replicas is an astonishing task and we designed an algorithm for content distribution. In the proposed algorithm, nodes are grouped into strong, medium and weak clusters based on their weight values. In the proposed replica placement algorithm, the contents are classified as class I, class II and class III, based on their access patterns. More copies of Class I content are replicated in strong clusters that are having high weight values. Routing is performed hierarchically by broadcasting the query to the strong, medium and weak clusters respectively. From wide simulations using NS2 simulator, the proposed algorithm achieves less bandwidth consumption, reduced latency, reduced maintenance cost, high throughput, and strong connectivity and query coverage.