This paper presents a new approach to modelling process-oriented knowledge management (KM) and describes a simulation environment (called KMSIM) that embodies the approach. Since the beginning of modelling researchers have been looking for better and novel ways to model systems and to use appropriate software to create simulations. The application of the approach and KMSIM make it possible to create realistic business models (BMs) and simulate the consequences of KM interventions and events. The validity of the approach and tools is being evaluated in the game KM Quest.