The close integration of vehicles and the infrastructure in the surface transportation system has been envisioned for years, but recent advances in wireless communications has made such integration feasible. Given this feasibility, a coalition of the public and private sectors is currently exploring the national deployment of vehicle infrastructure integration (VII), based on the relatively new Dedicated Short Range Communications (DSRC) standard. The Virginia Department of Transportation (VDOT) is a member of this coalition, known as the National VII Coalition. Most of the effort at the national level is focused on technology aspects and study of safety benefits. In order to best inform design, deployment and operations decisions, it is also necessary to fully evaluate potential VII-enabled operations applications. This research effort focused on the development of a simulation environment to model VII and associated operations applications. This model was then used to begin to explore implications of VII design decisions on the potential for VII to support traffic operations. A major contribution of this research was the development of a high resolution VII/traffic simulation environment. This environment uses AIMSUN for traffic simulation, integrated with custom code that emulates VII functionality. Using this model, VII roadside units (RSUs) were "placed" based on guidance from VII architecture and the extent of VII coverage was determined. A prototype traffic monitoring application was developed and evaluated for various penetration rates of VII equipped vehicles on an urban traffic network in the Tysons Corner area. The results of this study identify the important factors that influence the benefits that VII can provide for traffic monitoring. It was found from this study that based on current guidance in the VII Architecture, roughly 55% of the sections in the network would be within the direct range of an RSU. The accuracy and coverage analysis of the network illustrated that, based on the current VII architecture, around 60% of the network could be "covered" at low penetration rates. The error range for mean speed estimation was in range of 2.5 to 4 mph, even at very low VII penetration rates. Based on these findings, it is clear that potential benefits of VII are significant. However, given the sensitivity of the benefits to RSU deployment (which will require substantial investments in terms of installation and maintenance), the costs of VII will also be significant. As more information about the final national VII design becomes available, the simulation environment developed in this research can be used to conduct detailed benefit/cost analyses. Finally, the findings of this research support the need for VDOT to remain actively involved in VII development efforts and to expand VII research and evaluation efforts in the areas of operations applications.