Automatic test systems can evaluate the functionality of measurement and/or control hardware by simulating real world signals and verifying the expected response. Simulation takes the dynamics of real-world environments and models them using software to test the performance of critical system hardware components. Sensor simulation is the process of providing realistic sensor signals to the inputs of a device under test and evaluating how a piece of equipment will respond across a broad range of operating conditions. This paper will discuss the benefits of sensor simulation, and specifically reference the additional advantages to using an FPGA-based implementation.