Due to our familiarity with how fluids move and interact, as well as their complexity, plausible animation of fluids remains a challenging problem. We present a particle interaction method for simulating fluids. The underlying equations of fluid motion are discretized using moving particles and their interactions. The method allows simulation and modeling of mixing fluids with different physical properties, fluid interactions with stationary objects, and fluids that exhibit significant interface breakup and fragmentation. The gridless computational method is suited for medium scale problems since computational elements exist only where needed. The method fits well into the current user interaction paradigm and allows easy user control over the desired fluid motion. 1