A coordinated real-time optimal dispatch method for unbundled electricity markets is proposed in this paper. With this method, the pool energy auction market, ancillary services market, and bilateral contract market can be coordinated by the ISO through a balancing market for the purpose of system security. To meet real-time imbalance and to eliminate transmission congestion, operating reserves, curtailment of bilateral contracts, and supplemental energy bids in the real-time balancing market can all be called upon in light of their bidding prices. The replacement of the operating reserves used to provide balancing energy is incorporated into the objective of the real-time optimal dispatch problem. A modified P-Q decoupled optimal power flow is employed to implement this method. Spot pricing for the real-time dispatch is presented. The IEEE 30-bus test system and the IEEE RTS-96 test system are studied to illustrate the proposed framework.