AVRSim

An open-source simulator for the Atmel AVR series of microcontrollers. Now I know you are asking, why not use gdb,  AVR Studio, VMLAB
or any other simulator? gdb cannot simulate connected peripherals and would be too complicated to extend, AVR Studio is closed source
and I'm not sure of the capabilities of the plug-in SDK (yes, it is available from Atmel at last) as I don't own Visual Studio 7. Finally VMLAB is
an abandoned project which in my opinion was the most promising one in the bunch. So here I am.

System Requirements:

Microsoft Windows 2000/XP, with the Microsoft.NET framework version 2.0
Atmel AVR Studio v4.12 or later.

and if you want to get involved with the development, you will need the free Microsoft Visual Basic.NET Express 2005 IDE.

This project is still in very early development stages, but I hope to at least have the full instruction set implemented
and simulating by the beginning of January 2006.

Currently the software is capable of loading DWARF2 ELF object files (output by WinAVR) and Intel Hex files,
reading the device definition XML files provided with AVR Studio, parsing the object files, and limited simulation.

 

More information on AVR microcontrollers here.