The paper describes the design considerations for a system for modelling and simulation of mechatronic systems. The system is based on a component concept enabling the designer to pick component models that match the physical components of the setup to be modelled from a block library. Another important feature of the system is the ability to change the complexity of the simulation model in a simple, powerful and well structured way. This feature makes it simple for the designer to evaluate the influence of including different aspects of the components. The complexity can be changed both on the component level and for the whole model. This library that can be extended by the user contains standard components, such as DC-motors, potentiometers, encoders, pneumatic elements, and a Maple based facility to generate symbolic equations of motion. To evaluate the concepts the Mechatronic Simulink Library blockset has been implemented as a prototype based on MATLAB and Simulink and has been used to model several mechatronic systems. The library is presently being tested in different projects.