In order to adapt to the the requirement of the Instruction Set Simulator (ISS) simulation speed in embedded system development, an improved ISS technology was put forward.The technology introduced instruction preprocessing, dynamic decode cache structure, multi-thread C function generation and dynamic scheduling technique based on the existing static multi-core simulator to achieve the optimization of the simulator performance. This technique has been applied successfully in forming OPT-ISS, which is based on IME-Diamond multi-core DSP processor. The experimental results show that this technique improves the simulation speed indeed.