This paper presents the verification of our WLAN terminal (TUTWLAN), with its medium access control protocol and test applications, using cycle-accurate hardware/ software co-simulation. The protocol software has been implemented using SDL and automatic C code generation. The hardware implementation of the terminal contains hardware accelerators for time-critical protocol functions. Full system co-simulations were used for both the functional verification and performance evaluation of a single TUTWLAN terminal as well as a network of terminals. With simulations, the performance bottlenecks were identified, and the results enable the implementing of the next generation TUTWLAN terminal as a single-chip.