Abstract: Realistically animated fluids can add substantial realism to interactive applications such as virtual surgery simulators or computer games. In this paper we propose an interactive method based on Smoothed Particle Hydrodynamics (SPH) to simulate fluids with free surfaces. The method is an extension of the SPH-based technique by Desbrun to animate highly deformable bodies. We gear the method towards fluid simulation by deriving the force density fields directly from the Navier-Stokes equation and by adding a term to model surface tension effects. In contrast to Eulerian grid-based approaches, the particle-based approach makes mass conservation equations and convection terms dispensable which reduces the complexity of the simulation. In addition, the particles can directly be used to render the surface of the fluid. We propose methods to track and visualize the free surface using point splatting and marching cubes-based surface reconstruction. Our animation method is fast enough to be used in interactive systems and to allow for user interaction with models consisting of up to 5000 particles.