Advances in software simulation tools have significantly affected the way in which complex and highly dynamic systems are designed and analyzed. Software tools that accommodate real-time and hardware-in-the-loop simulation provide the capability for designers to examine system architecture and operational philosophy, in addition to the ability to analyze and predict system performance prior to actual hardware and software implementation. The discussion in this paper centers on a simulation environment that utilizes high-fidelity mathematical models and a human machine interface (HMI) for replicating shipboard systems with special emphasis on operational performance, situational awareness, and dynamic human-computer collaboration. The paper reviews the state of the practice in real-time, hardware-in-the-loop simulation and its application to shipboard control systems, and also addresses several technical issues including model fidelity, system interfaces, and HMI features. For design and analysis purposes, the level of fidelity in the system models is considered in order to assure the simulation is reasonably useful for examining system architecture, design features, and system operational performance. For systems having a large number of input/output signals where it is not practical to incorporate full hardware-in-the-loop simulation, different computer network interfaces are considered to facilitate implementation of large-scale dynamic simulations. The paper also discusses the importance of robust implementation of human-computer interfaces to provide realistic scenarios in which the system operators interact with the simulation models as though they are controlling and monitoring the real systems. A key consideration in HMI features is the ability to inject faults into the system models mimicking real-life, human-in-the-loop operations that can be used for operator training purposes. Core technologies facilitating the development of the simulation environment include component modeling methodologies, high-speed network communications, simulation hardware and software architecture, and graphical user interface tools for prototype development. Finally, an example is drawn from the area of ship propulsion and navigation systems, including an illustration of real-time control and monitoring of the ship platform