The purpose of this research is to develop a simulation-based real-time scheduling system for a flexible manufacturing system. A scheduling mechanism is developed, where the job dispatching rule varies dynamically based on information from simulation. Discrete event simulation has been used for evaluating several dynamic dispatching rules. Major components of the scheduling mechanism are a simulation mechanism and a real-time control system. The simulation mechanism evaluates dispatching rules and selects the best dispatching rule for a given criterion. The real-time control system contains a limit value of performance, periodically monitors the shop floors and checks the performance value of the system. The selected dispatching rule is used until the value exceeds the given performance limit, when a new simulation is performed with remaining operations in the simulation mechanism and a new dispatching rule is selected. Since the scheduling mechanism can fully utilize the information on the current state of shop floors, it can be used effectively in real situations.