Performance characterization and analysis of processors have two main purposes. The first is to optimize the design of a new processor. The second is to make a choice among various processors for a particular design project. A new processor might have a new instruction set architecture (ISA), but more likely will create a derivative of a configurable, extensible processor. To support this process, processor characterization and analysis, using simulation models and benchmarks are essential. Benchmarks may be industry standards with years of development and use, or application-oriented code drawn from the design target domain. This chapter will outline the various use cases and history of processor characterization approaches and benchmarks. It will also discuss the construction and use of processor simulation. It uses as examples methods available for specific families of configurable, extensible processors, as well as other references drawn from industry and academia, to illustrate the principles in real use.