How do people make causal judgments and assign responsibility? In this paper, I argue that counterfactual simulations are key. To simulate counterfactuals, we need three ingredients: a generative mental model of the world, the ability to perform interventions on that model, and the capacity to simulate the consequences of these interventions. The counterfactual simulation model (CSM) uses these ingredients to capture people's intuitive understanding of the physical and social world. In the physical domain, the CSM predicts people's causal judgments about dynamic collision events, complex situations that involve multiple causes, omissions as causes, and causes that sustain physical stability. In the social domain, the CSM predicts responsibility judgments in helping and hindering scenarios.