The Image Understanding Environment (IUE) project is a five year program, sponsored by ARPA, to develop a common object-oriented software environment for the development of algorithms and application systems. This paper reviews the design of this system and provides an overview of the distributed implementation effort currently underway at Amerinex AI, Advanced Decision Systems, Carnegie Mellon University, and Colorado State University. The ultimate goal of the project is to provide a software infrastructure of class hierarchies, user interface tools, and IU algorithms that are required to carry out state of the art research in image understanding.<>