The virtual manufacturing is an advanced manufacturing technology which came into being in 1990s. Due to fierce market competition, manufacturers are making radical changes in management practices and investing greatly in advanced technologies in order to achieve sustainable competitive advantage. Under this circumstances, the virtual manufacturing technology was formed gradually. Nowadays, the concordant understanding of virtual manufacturing is: set up the virtual model of production system and then simulate the real manufacturing process. According to that, it’s obvious to find that without real manufacturing process, the satisfaction of virtual model production system can still be verified. If some changes about the virtual manufacturing model need to be done for optimizing production system, the right of making corresponding changes is rested in manufacturer’s hands and it’s easier to obtain the optimization by the means of virtual manufacturing than the traditional ones. Virtual manufacturing has made rapid progress in the 21st century. This article introduced the definition and characteristics of virtual manufacturing and its classification and key technologies, its development and application situation, and finally, we pointed out the developing trend of virtual manufacturing and gave some suggestions on that.