This report describes design techniques, areas of effective application, and research directions in educational simulations. The five chapters contain (1) a review of recent literature; (2) an overview of the field of simulation including definitions and some of the rationales for using simulation in instruction; (3) an outline of the design approaches of several major simulation centers and a model containing 13 specific guidelines for use in designing an instructional simulation system; (4) an analysis of the implications for education of simulation applications in the military, government, and industry; (5) examples of the application of simulation to several areas of vocational education; and (6) illustrations of the use of simulation as a measurement device for assessing educational progress and predicting complex human behavior. The appendix contains a list of some common independent and dependent variables in simulation games, four issues of the Instructional Simulation Newsletter, and a list of 11 suggested new directions for games and simulations. (JH)