The growing complexity of powertrain control strategies, software, and hardware is proving to be a significant challenge to the engineering community with regard to managing effective optimization to meet the desired performance. With an increased emphasis on shorter development time and the use of additional sensors and actuators becoming common, the increased dependence on physical models and use of complex interdependent control systems demands a thorough system understanding. This also encourages the use of process improvement tools to assist in an effective engineering process. In this paper, such a tool is discussed in its second phase of development. The Micro-HiL system will be discussed over a wide scope that focuses on the interests of the calibration and development community.The purpose of this paper is to provide an update on the Phase 2 activity of Micro-HiL development; Phase 1 was discussed in-depth at the 2011 SAE World Congress [2011-01-0703]. Beginning with a detailed discussion on new components that were incorporated into the Micro-HiL, the latter part of the paper will focus on several new functional areas that were introduced. The major component discussion will involve idle governing, aftertreatment modeling, engine model extension, and how a complete desktop test cell environment was realized. Finally, the reader will be shown how a virtual testing environment can be applied by harnessing known tools, and how this approach can play a crucial role in supporting the development and calibration community in their daily activity.