Intelligent Transportation Systems (ITS) have the potential to improve traffic conditions and reduce travel delays. As a decision support software system for ITS, DynasTIM is based on the principle of dynamic traffic assignment and developed for real-time online simulation, prediction and optimization of dynamic traffic flows in urban or expressway networks. This paper introduces the models, algorithms and some typical applications of DynasTIM. The main contents include: the functional architecture; the application architecture of the system; dynamic OD (Origin-Destination) flows estimation method with novel formula for assignment matrix computation; mesoscopic traffic model using variable-length speed influence region and calibrating speed online based on connected vehicles data; and parallel SPSA algorithm based urban area signal optimization method. The functions of DynasTIM are implemented basically through three main modules: state estimation (ES), state prediction and control strategy optimization (PS&CSO), and guidance strategy optimization (GSO). The case study is aimed at the populated Futian Central Business District (CBD) road network in Shenzhen, China, which has an area of about 7 square kilometers. Based on the archived turning counts collected from 359 video traffic detection locations, DynasTIM was calibrated offline for this network, in order to validate the capability of simulating actual traffic conditions, and to set up basic conditions for testing signal optimization methods. The results show that the simulation output flows of DynasTIM have fairly good matching accuracy with the real surveillance flows in the field. Furthermore, for the CBD network with 38 signalized intersections, the signal optimization method is evaluated and better signal timing plans are found which can reduce about 13% average travel delay, compared with the signal plans currently implemented in the field.