An unstructured dynamic mesh adaptation and load balancing algorithm has been developed for the efficient simulation of three-dimensional unsteady inviscid flows on parallel machines. The numerical scheme was based on a cell-centred finite-volume method and the Roe's flux-difference splitting. Second-order accuracy was achieved in time by using an implicit Jacobi/Gauss-Seidel iteration. The resolution of time-dependent solutions was enhanced by adopting an h-refinement/coarsening algorithm. Parallelization and load balancing were concurrently achieved on the adaptive dynamic meshes for computational speed-up and efficient memory redistribution. A new tree data structure for boundary faces was developed for the continuous transfer of the communication data across the parallel subdomain boundary. The parallel efficiency was validated by applying the present method to an unsteady shock-tube problem. The flows around oscillating NACA0012 wing and F-5 wing were also calculated for the numerical verification of the present dynamic mesh adaptation and load balancing algorithm. Copyright © 2005 John Wiley & Sons, Ltd.