A general modeling and simulation strategy suitable for the theoretical analysis of wavelength division multiplexed (WDM) fiber-optical systems is presented. We give a detailed explanation of component models and algorithms of different complexity and accuracy which can be used throughout the simulation. Transmitter chirp and noise, fiber dispersion and nonlinearity, imperfect filter and multiplexer characteristics, amplified spontaneous emission noise of the optical amplifiers, crosstalk in network elements such as optical add/drop multiplexers or optical cross-connects, and the polarization-dependence of the components are taken into account. Methods for a performance evaluation by means of eye patterns, spectral power densities, the optical signal-to- noise ratio, the Q-factor and the bit error rate are also addressed. Based on this work, a complete design environment consisting of a graphical network editor and an independent simulation engine (FOCUSS, Fiber Optic CommUnication System Simulator) has been implemented in C++. Simulation examples are presented here e.g. for wavelength-routed networks.