The application of three-dimensional (3-D) CAD has been popularized for design and production and digital manufacturing has been spreading in many industrial fields. By simulation of the production process using 3-D digital models, which are the core of CIM (Computer Integrated Manufacturing) system, the efficiency and safety of production are improved at each stage of work, and optimization of manufacturing can be achieved. This paper firstly describes the concept of "simulation based production" in shipbuilding and also digital manufacturing; the 3-D CAD system is indispensable for effective simulation because ship structure is three dimensionally complex. By simulation, "computer optimized manufacturing" can be possible. The most effective fields of simulation in shipbuilding are in jobs where many parties have to cooperate, while existing two-dimensional drawings are hardly observed the whole structures due to interference between structures or equipment of complex shape. In this paper some examples of the successful application in IHIMU (IHI Marine United Inc.) are shown: assembly of a pipe unit, erection of a complex hull block, carriage of equipment, installation of a propeller, and access in an engine room.