This article describes the INSYDE3 methodology for the design of hybrid systems. This methodology covers the development life-cycle from initial requirements capture, through design and implementation, to validation. The validation of a hybrid system is achieved by co-simulating a formal description of the hybrid system. This formal description is derived from the initial requirements capture by integrating an object-oriented analysis and modelling tool, OMT, with two domain-specific formal description languages, SDL and VHDL, for the description of the software and hardware subsystems respectively. The automatic translation of the system, described in a formal variant of OMT, to SDL and VHDL ensures that descriptions of the software and hardware subsystems together form a coherent description of the hybrid system. The article describes how this formal description forms the basis for co-simulation. The advantages of using heterogeneous co-simulation for validating hybrid systems are described, and the article shows how the methodology, and supporting tools, support the co-simulation by automatically generating the necessary code to connect and synchronise the individual SDL and VHDL simulators.