Hardware-in-the-loop (HIL) simulation is a technique that is being used increasingly in the development and test of complex systems. Real-world testing of an intricate system in a field-like power plant can be challenging, time-consuming, expensive, and hazardous. HIL emulators allow engineers to test devices thoroughly and efficiently in a virtual environment with high reliability and minimum risk of defect. In this paper, the complete electric power system (including generator, turbine-governor, excitation system, transmission lines, transformer, external grid and related loads) is implemented in a MATLAB/Simulink environment. Different virtual instrument pages are modeled in the graphical programming language of LabVIEW which enable fast and reliable measurement functions such as data acquisition, archiving, real-time graphical display and processing. The interaction between MATLAB and LabVIEW is accomplished by generating a Pharlap ETS Targets * .dll file which enables the two software to exchange real-time data. Also, a real 1518-kW excitation system is considered as a test case for the introduced HIL system. This equipment is connected to LabVIEW software through a National Instrument PXI technology. Different scenarios (electrical frequency/active power change, voltage step response, etc.) are simulated in the designed power system emulator (PSE).