In this study, we develop regional power system simulation model with external generation and transmission systems simulated by reduced models. The simulated conclude the power flow, the short circuit and the transient stability of any pre-specified regional power system. As both power flow and transient stability simulation models have nonlinear characteristics, their model reduction based on heuristic rules are proposed and the system impedance modeling approach is adopted to reduce the external system models. These heuristic rules for the power flow and transient stability simulations, as well as the system impedance modelling and model parameter calculation formulas are both presented to formulate the reduced model for the external systems.