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Autonomous underwater vehicles (AUVs) have many scientific, military, and commercial applications because of their potential capabilities and significant cost-performance improvements over traditional means for performing search and survey. The development of a reliable sampling platform requires a thorough system design and many costly at-sea trials during which systems specifications can be validated. Modeling and simulation provides a cost-effective measure to carry out preliminary component, system (hardware and software), and mission testing and verification, thereby reducing the number of potential failures in at-sea trials. An accurate simulation can help engineers to find hidden errors in the AUV embedded software and gain insights into the AUV operations and dynamics. This paper reviews our research work on real-time physics-based modeling and simulation for our AUVs. The modeling component includes vehicle dynamics, environment and sensor characteristics. The simulation component consists of stand-alone versus hardware-in-the-loop (HIL) implementation, for both single as well as multiple vehicles. In particular, implementation issues with regard to multitasking system resources will be addressed. The main contribution of this paper is to present the rationale for our simulation architecture and the lessons learned.