The first part of this paper reviews some physics issues representing major computational challenges for global MHD models of the space environment. These issues include: (i) mathematical formulation and discretization of the governing equations that ensure the proper jump conditions and propagation speeds, (ii) regions of relativistic Alfv?n speed, and (iii) controlling the divergence of the magnetic field. The second part of the paper concentrates to modern solution methods that have been developed by the aerodynamics, applied mathematics and DoE communities. Such methods have recently begun to be implemented in space-physics codes, which solve the governing equations for a compressible magnetized plasma. These techniques include high-resolution upwind schemes, block-based solution-adaptive grids and domain decomposition for parallelization. While some of these techniques carry over relatively straightforwardly to space physics, space physics simulations pose some new challenges. Finally, the third part of the paper describes the applications of the code to space weather simulations.