It is a well known fact that managed care and new treatment technologies are revolutionizing the health care provider world. Community Health Information Network and Computer-based Patient Record projects are underway throughout the United States. More and more hospitals are installing digital, `filmless' radiology (and other imagery) systems. They generate a staggering amount of information around the clock. For example, a typical 500-bed hospital might accumulate more than 5 terabytes of image data in a period of 30 years for conventional x-ray images and digital images such as Magnetic Resonance Imaging and Computer Tomography images. With several hospitals contributing to the archive, the storage required will be in the hundreds of terabytes. Systems for reliable, secure, and inexpensive storage and retrieval of digital medical information do not exist today. In this paper, we present a Medical Image Archive and Distribution Service (MIADS) concept. MIADS is a system shared by individual and community hospitals, laboratories, and doctors' offices that need to store and retrieve medical images. Due to the large volume and complexity of the data, as well as the diversified user access requirement, implementation of the MIADS will be a complex procedure. One of the key challenges to implementing a MIADS is to select a cost-effective, scalable system architecture to meet the ingest/retrieval performance requirements. We have performed an in-depth system engineering study, and developed a sophisticated simulation model to address this key challenge. This paper describes the overall system architecture based on our system engineering study and simulation results. In particular, we will emphasize system scalability and upgradability issues. Furthermore, we will discuss our simulation results in detail. The simulations study the ingest/retrieval performance requirements based on different system configurations and architectures for variables such as workload, tape access time, number of drives, number of exams per patient, number of Central Processing Units, patient grouping, and priority impacts. The MIADS, which could be a key component of a broader data repository system, will be able to communicate with and obtain data from existing hospital information systems. We will discuss the external interfaces enabling MIADS to communicate with and obtain data from existing Radiology Information Systems such as the Picture Archiving and Communication System (PACS). Our system design encompasses the broader aspects of the archive node, which could include multimedia data such as image, audio, video, and free text data. This system is designed to be integrated with current hospital PACS through a Digital Imaging and Communications in Medicine interface. However, the system can also be accessed through the Internet using Hypertext Transport Protocol or Simple File Transport Protocol. Our design and simulation work will be key to implementing a successful, scalable medical image archive and distribution system.