In recent years, because of the intense competition between universities, sustaining the predominance in competition for the business continuity has become a significant issue for performance evaluation of universities. However, the traditional static performance evaluation is unable to solve the complicated problem about dynamics and does not have the characteristic of immediate feedback; as a result, the impetus benefit does not come to what people would expect. The purpose of the study is to cite the evaluation of indicators and use the methodology of System Dynamics, and then to construct a system dynamics model for evaluating operational performance of universities. Analysis of tests and validity with past and present policies of a university was used to take stock of applicability with dynamics on performance appraisal of universities. According to the result, the constructed system dynamics model is very effective in appraising operational performance of universities. The variation of the model performance index in a successive time is able to reflect the historical and present data and to adjust avenue and mechanism of policies at the right moment; therefore, validity analysis of the model shows its perfect accuracy. Finally, the model was tested again with the implementation of different policies to see its performance indicators of changes in circumstances and its effects. Based on the findings, the study made some suggestions for the application of the model by universities and for future research.