A number of emerging challenges including globalization, economic pressures, and the changing nature of work have combined to create a business environment that demands innovative, flexible training solutions. Simulations are a promising tool for creating more realistic, experiential learning environments to meet these challenges. Unfortunately, the current literature on simulation-based training paints a mixed picture as to the effectiveness of simulations as training tools, with most of the previous research focusing on the specific technologies used in simulation design and little theory-based research focusing on the instructional capabilities or learning processes underlying these technologies. This article examines the promise and perils of simulation-based training, reviews research that has examined the effectiveness of simulations as training tools, identifies pressing research needs, and presents an agenda for future theory-driven research aimed at addressing those needs. been an increased prevalence of simulation-based training in both academia and industry. Faria (1998), for example, found that 97.5% of business schools used simulation games in their curricula. Faria and Nulsen (1996) estimated that 75% of US organizations with more than 1,000 employees were using business simulations, and it has been estimated that in 2003 the corporate simulation-based training industry generated between $623 and $712 million in revenue globally (Summers, 2004).The increased prevalence of simulations is due, in part, to the many potential benefits they offer as a training medium. Like other types of distributed learning systems, simulations allow training to occur almost anywhere and anytime, and this flexibility can be used to reduce or eliminate many of the variable costs associated with traditional training, such as classrooms and instructors (Summers, 2004). Simulations also possess unique features that create the potential for instructional benefits not offered by other instructional mediums. For example, simulations can be used to create a synthetic-or micro-world that immerses trainees in a realistic experience and exposes them to important contextual characteristics of the domain (Schiflett, Salas, & Coovert, 2004). Simulations can also be used as realistic practice environments for tasks that are too dangerous to be practiced in the real world or to provide opportunities for practice on tasks that occur infrequently (Cannon-Bowers & Bowers, in press).Simulation-Based Training 4 Elliott,Despite their vast potential, there are a number of costs and challenges associated with utilizing simulations to deliver training. One challenge is that the fixed costs associated with developing simulations are high and can be prohibitive for smaller organizations with limited training budgets. For example, it has been estimated that simulations delivered via e-learning can require 750 to 1,500 hours of development for each hour of training (Chapman, 2004).Perhaps a more important challenge is that research on the...