A modeling and simulation methodology for digital optical computing systems is introduced in this paper. The methodology predicts maximum performance of a given optical computing architecture and evaluates its feasibility. As an application example, we apply this methodology to evaluate the feasibility and performance of the optical content-addressable parallel processor proposed in Appl. Opt. 31, 3241 (1992). The approach consists of two major phases. The first phase involves analytical studies of the effects of design parameters such as cross talk, diffraction-limited beam spot diameter, and pitch on system performance parameters such as signal packing density and skew time. In the second phase, a simulation model and a simulator are introduced by the use of GLAD (General Laser Analysis and Design, an optical software package developed by Applied Optics Research) to evaluate the combined effects of bit-error rate, bit rate, optical power efficiency, available source power, and signal contrast on the perfor ance parameters such as signal packing density, misalignment tolerance, and distance between devices. The methodology presented here investigates the model, not on a component-by-component basis, but as a whole, which produces a more realistic representation of the actual laborator prototype. The proposed methodology is intended to reduce the optical computing system design time as well as the design risk associated with building a prototype system.