Recently, virtual reality technology is attracting the attentions as one of key technology of the 4th industrial revolution. This presentation introduces physics-based real-time simulation method which is a key technology for realizing high-quality virtual reality application. Physics-based real-time simulation refers to simulating the behavior of a virtual environment object in real time based on the physical laws of the real world. It is essential for users to feel the virtual environment as a real world, and necessary to enhance user's immersion into the virtual world. Among various type of objects such as rigid bodies, deformable bodies, and fluids, it presents real-time simulation method of deformable bodies. Finite element method, meshfree method, and mass-spring method will be briefly explained. A computational performance enhancement for real-time simulation will be presented. As an application of real-time simulation, several medical simulations including colonoscopy simulation, laparoscopic simulation, and eye surgery simulation will be presented.