Siemens and Loral Western Development Labs have designed a Picture Archiving and Communication System capable of supporting a large, fully digital hospital. Its functions include the management, storage and retrieval of medical images. The system may be modeled as a heterogeneous network of processing elements, transfer devices and storage units. Several discrete event simulation models have been designed to investigate different levels of the design. These models include the System Model, focusing on the flow of image traffic throughout the system, the Workstation Models, focusing on the internal processing in the different types of workstations, and the Communication Network Model, focusing on the control communication and host computer processing. The first two of these models are addressed here, with reference being made to a separate paper regarding the Communication Network Model. This paper describes some of the issues addressed with the models, the modeling techniques used and the performance results from the simulations. Important parameters of interest include: time to retrieve images from different possible storage locations and the utilization levels of the transfer devices and other key hardware components. To understand system performance under fully loaded conditions, the proposed system for the Madigan Army Medical Center was modeled in detail, as part of the Medical Diagnostic Imaging Support System (MDIS) proposal.