Hardware in the loop (HIL) simulation based on modern digital signal processors is a cost-effective technology for the design and evaluation of various sophisticated weapon and industrial systems. In this article a HIL simulation is presented through the very complex problem of modernisation of the semi-automatic command to line of sight (SACLOS) missile system. The presented examples illustrate the importance of the HIL simulation technology for the cost-effective, non-destructive prototype development of such SACLOS systems. The key role of a flexible simulation platform consisting of 4 TMS320C40 digital signal processors for efficient real-time simulation of the implemented SACLOS subsystem models is also emphasised in this paper.