As cost becomes an increasingly important factor in the development and testing of infrared (IR) sensors and flight computer/processors, the need for accurate hardware-in-the- loop simulations is critical. In the past, expensive and complex dedicated scene generation hardware was needed to attain the fidelity necessary for accurately testing systems under test (SUT). Recent technological advances and innovative applications of established technologies are beginning to allow development of cost effective replacements for dedicated scene generators. These new scene generators are mainly constructed from commercial off-the- shelf (COTS) hardware and software components. At the U.S. Army Missile Command (MICOM) researchers have developed such a dynamic IR scene generator (IRSG) built around COTS hardware and software. The IRSG is being used to provide inputs to an IR scene projector for in-band sensor testing and for direct signal injection into the sensor or processor electronics. Using this `baseline' IRSG, up to 120 frames per second (Hz) of 12-bit intensity images are being generated at 640 by 640 pixel resolution. The IRSG SUT-to- target viewpoint is dynamically updated in real time by a six-degree-of-freedom SUT simulation executing on a facility simulation computer, synchronized with an external signal from the SUT hardware, and compensates for system latency using a special purpose hardware component implemented on a single VME card. Multiple dynamic targets, terrain/backgrounds, countermeasures, and atmospheric effects in real time by the facility simulation computer via a shared memory interface to the IRSG. The `next generation' IRSG is currently under development at MICOM using `next generation' COTS hardware and software. `Next generation' performance specifications are estimated to yield 16-bit intensity, 250 - 300 Hz frame rate, at 1024 X 1024 pixel resolution.