The interest in dynamic modulation of light by ultra-thin materials exhibiting insulator–metal phase transition, such as VO2, has rapidly grown due to the myriad industrial applications, including smart windows and optical limiters. However, for applications in the telecommunication spectral band, the light modulation through a thin VO2 film is low due to the presence of strong material loss. Here, we demonstrate tailored nanostructuring of VO2 to dramatically enhance its transmission modulation, reaching a value as high as 0.73, which is 2 times larger than the previous modulation achieved. The resulting designs, including free-topology optimization, demonstrate the fundamental limit in acquiring the desired optical performance, including achieving positive or negative transmission contrast. Our results on nanophotonic management of lossy nanostructured films open new opportunities for applications of VO2 metasurfaces.