This article presents a new method for real-time fluid simulation in computer graphics and dynamic virtual environments. By solving the 2D Navier-Stokes equations using a computational fluid dynamics method, the authors map the surface into 3D using the corresponding pressures in the fluid flow field. This achieves realistic real-time fluid surface behaviors by employing the physical governing laws of fluids but avoiding extensive 3D fluid dynamics computations. To complement the surface behaviors, they calculate fluid volume and external boundary changes separately to achieve full 3D general fluid flow. Unlike previous computer graphics fluid models, their model allows multiple fluid sources to be placed interactively at arbitrary locations in a dynamic virtual environment. The fluid will flow from these sources at user modifiable flow rates following a terrain which can be dynamically modified, for example, by a bulldozer. This approach can simulate many different fluid behaviors by changing the internal or external boundary conditions, and can model different kinds of fluids by varying the Reynolds number. It can simulate objects moving or floating in fluids and produce synchronized general fluid flow in a distributed interactive simulation.