In this paper we present a new rate-based flow control scheme for ATM ABR, services and analyze its performance. The proposed algorithm, which we refer to as first-order rate-based flow control (FRFC) is the most simple form of queue-length-based flow control. The asymptotic stability, the steady-state throughput, queue length and fairness, and the transient behavior are analyzed for the case of multiple connections with diverse round-trip delays. We also consider novel approach to dynamically adjust a queue threshold in the FRFC according to the changes in the available bandwidth, and the arrival and departure of connections. Simulations show that the simple FRFC with dynamic queue threshold (DQT) effectively maintains high throughput, small loss and a desired fairness in these dynamic environments and is a promising solution for ABR flow control in ATM networks. (C) 1998 Elsevier Science B.V.