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                                                                      EXHIBIT 11

                   MECHANICAL DYNAMICS, INC. AND SUBSIDIARIES
                       COMPUTATION OF EARNINGS PER SHARE
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                  (UNAUDITED)

<TABLE>
<CAPTION>                                                                               
                                               Three Months Ended     Nine Months Ended      
                                                 September 30,          September 30,          
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                                               1996       1995        1996       1995     
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<S>                                            <C>        <C>        <C>         <C>    
PRIMARY EARNINGS PER SHARE:                                                             
  Net income                                    $713       $361      $1,645       $904  
    Accretion of warrants                          0         58           0        168  
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  Net income available to common shareholders   $713       $303      $1,645       $736  
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  Weighted average common shares outstanding   5,743      3,259       4,732      3,257  
  Shares issued below fair market value            0         47           0         47  
  Converted preferred shares                       0        485           0        485  
  Effect of stock options and warrants           119         62          77         51  
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    Adjusted shares outstanding                5,862      3,853       4,809      3,840  
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  Net income per common share                  $0.12      $0.08       $0.34      $0.19  
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FULLY DILUTED EARNINGS PER SHARE:                                                       
  Net income available to common shareholders   $713       $303      $1,645       $736  
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  Weighted average common shares outstanding   5,743      3,259       4,732      3,257  
  Shares issued below fair market value            0         47           0         47  
  Converted preferred shares                       0        485           0        485  
  Effect of stock options and warrants           130         65         130         65  
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    Adjusted shares outstanding                5,873      3,856       4,862      3,854  
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  Net income per common share                  $0.12      $0.08       $0.34      $0.19  
========================================================================================
</TABLE>