When designing CNC machine tools it is important to consider the dynamics of the control, the electrical components and the mechanical structure of the machine simultaneously. This paper describes the structure and implementation of a concept for real-time simulation of such machine tools using a water jet cutting machine as an application. The concept includes a real control system, simulation models of the dynamics of the machine and a virtual reality model for visualisation. The real-time capability of the concept, including the simulation of electrical and rather detailed mechanical component models is proofed. The validation process indicates good agreement between simulation and measurement, but suggests further studies on servo motor, connection and flexibility modelling. However, already from the initial simulation results presented in this paper it can be concluded that the influence of structural flexibility on manufacturing accuracy is of importance at desired feeding rates and accelerations. The fully automated implementation developed in this work is a promising base for dealing with this trade-off between productivity and accuracy of the manufacturing process through multidisciplinary optimisation.