This paper presents the implementation of an electrical power system in MATLAB/Simulink and its execution in a real-time environment, called laboratory set-up for real-time power system simulation. This test-bed can help engineer and operator to learn the reaction of real power system in a virtual environment. Consistent to this issue, related software and hardware (National Instrument) are utilized to monitor electrical system variables, as well as analyze and evaluate power system stability in different real scenarios. The system implemented in MATLAB/Simulink, includes synchronous generator, power system stabilizer (PSS), excitation system and external grid. PXIe-8133 hardware allows user to execute different scenarios in the real-time mode. Also, LabVIEW DSC Module, a special monitoring system for industrial application, is used to access and flow data between several Vis. A program is developed in LabVIEW environment to initialize interaction between MATLAB generated *.dll file and LabVIEW via simulation interface toolkit (SIT) and in a parallel operation, data is simultaneously transferred between these two environments. EZDSP 320f2812 board is considered as hardware-in-the-loop (HIL). This feature helps engineer to implement control logic of power system equipment (here, real excitation system logic) in the DSP board. Based on the proposed idea, this board can serve as an emulator of the real system and the functionality of control logic as well as its behavior is simulated and verified. This board and related potentiometer play the role of real excitation system and receive three-phase voltages and currents from NI PXI 7833R card. In return, the board generates excitation voltage and sends it back to PXIe-8133 and consequently, the loop will be closed. Finally, different scenarios in a power system are provided to show the application of real-time HIL system in the power industry as well as verification of proposed approach for training centers.