A computer model is presented for the formation and sensing of defocused images in a typical CCD camera system. A computer simulation system named IDS has been developed based on the computer model. IDS takes as input the camera parameters and the scene parameters. It produces as output a digital image of the scene as sensed by the camera. IDS consists of a number of distinct modules each implementing one step in the computer model. The modules are independent and can be easily modified to enhance the simulation system. IDS is being used by our group for research on methods and systems for determining depth from defocused images. IDS is also being used for research on image restoration. It can be easily extended and used as a research tool in other areas of machine vision. IDS is a machine independent and hence portable. It provides a friendly user interface which gives the user full access and control to the parameters and intermediate results.