This paper presents the development and evaluation of alternative dispatching and route policies for an exclusive bus lane. The current operating system is described in terms of passenger demand, bus lines using the lane and layout features of the lane. The major operational problem of bus convoying is discussed within the context of “bunching” phenomenon. Assumptions, variables and constraints associated with the simulation model developed to experiment with alternative dispatching and route policies are introduced. Four dispatching and three route policies are tested during experimentation. Dispatching policies are defined with respect to dispatching frequencies for each line using the exclusive lane. Route policies are presented in terms of the bus stops served, the emphasis being put on the ring and express services. Four performance measures are defined in order to evaluate and compare the alternative policies developed, namely: (i) the difference between the percent increase in the number of total passengers boarded and the percent increase in the number of buses operating, (ii) average number of passengers boarded at a unit bus stop, (iii) average time spent by a bus stop and (iv) average bus capacity utilization rate. Comparisons of alternative operating policies based on these performance measures are presented in graphical and tabular format. A statistical evaluation of the findings is also given within the framework of analysis of variance where each performance measure is considered to be the response variable, and the controllable variables are taken to be the (i) dispatching frequency, (ii) route, (iii) passenger demand distribution and (iv) the number of replications. The major findings indicate the importance of the “route” factor for this study, whereas the performances of alternative operating policies are shown to be insensitive to the dispersion parameter of passenger demand.