Particle-based simulation techniques have recently emerged as an attractive alternative to more traditional methods for studying such diverse behavior as rarefied gas dynamics, flow and transport in complex geometries and nanometer devices, and the dynamics and rheology of complex liquids such as amhiphilic mixtures, polymer solutions, and colloidal suspensions. In this talk, we describe a recently introduced stochastic simulation technique for modeling fluid dynamics, which we call stochastic rotation dynamics (SRD). The mesoscopic particle dynamics consists of free streaming interrupted by multi-particle collisions. The stochastic collisions are carried out by performing random rotations of particle velocities in predetermined cells in a manner that conserves mass, momentum, and energy. Results for the transport coefficients are presented. It is shown how a hybrid molecular dynamics-SRD approach can be used to model the dynamics and rheology of embedded colloidal particles and polymers.