In 1988, Schulten moved to the University of Illinois at Urbana-Champaign (UIUC), where he founded the Theoretical and Computational Biophysics Group at the Beckman Institute for Advanced Science and Technology in 1989.
The early development of NAMD at UIUC built on the work of Schultens students in Munich to build a custom parallel computer optimized for molecular dynamics simulations.  The first simulation on the T60 modeled 27,000 atoms of membrane structure, and took twenty months to run.  The simulation results agreed with experimental results, and were eventually published in the Journal of Physical Chemistry'.
Work on the T60 and the Connection Machine convinced Schulten that more computing power and expertise were needed. Schulten partnered with computer scientists Robert Skeel, and Laxmikant V. Kale ("Sanjay" Kale) on a five-year grant from the NIH, and their students began writing molecular dynamics code in a new language, C++. Since then, Schulten's research group has become well known for the development of software for computational structural biology, including the molecular dynamics package NAMD and the visualization software VMD. The packages are freely usable for non-commercial research, and are used by approximately 300,000 researchers world-wide.
Over time, Schulten targeted biological structures of increasing size and complexity, with larger and larger computers. By 2007 he was exploring molecular modeling using graphical processing units (GPUs). Validation of models against experimental results is an integral part of development, for example, using molecular dynamics in combination with cryo-electron microscopy and X-ray crystallography.  to study the structures of large macromolecular complexes.
1996 marked the publication of Schultens model of the LH2 structure of the photosynthetic reaction centre protein family of Rhodospirillum molischianum. Drawing upon Richard J. Cogdells structure of nine-folded LH-2 from Rhodopseudomonas acidophila, Schulten worked with Michel to develop an eight-folded crystal structure model of LH2 in R. molischianum. In addition to its spectroscopic properties, they examined its energy transfer reactions in photosynthetic light-harvesting.
In 2006, Schultens group modeled the satellite tobacco mosaic virus, emulating femtosecond interactions of approximately one million atoms in the virus and a surrounding drop of salt water for 50 billionths of a second. It was the first time that such a complete model had been generated, requiring the resources of the National Center for Supercomputing Applications at Urbana. The simulation provided new insights about activities of the virus. One discovery was that the virus, which looks symmetrical in still images, actually pulses in and out asymmetrically.  Another was that the virus coat, the protein capsid, is dependent upon the genetic material in the RNA core of the particle and will collapse without it. This suggests that the genetic material must already be present before the virus can build its coat when reproducing.  Such research points to possible interventions that may help to control the virus, and also offers the possibility of exploring possible interventions in silico' to predict effectiveness.
A 2009 review describes work in modeling and verifying simulations of proteins such as titin, fibrinogen, ankyrin, and cadherin using the group's "computational microscope".
In 2010, Schultens group at Illinois and researchers at the University of Utah published research examining the development of drug resistance to Tamiflu in H1N1pdm swine influenza and H5N1 avian influenza virus. Their simulations suggested that drug resistance may arise from disruption of the binding process due to electrostatic attraction in charged neuraminidase pathways, in addition to disruption of Tamiflus pentyl sidegroup.
In 2013, Schulten's group published a simulated structure of the human immunodeficiency virus capsid containing 64 million atoms, among the largest simulations reported, produced using the supercomputer Blue Waters.
As of 2015, the largest reported simulations involved a hundred million atoms. Schultens team modeled the structure and function of a Purple bacterias chromatophore, one of the simplest living examples of photosynthesis. Modeling the processes involved in  converting sunlight into chemical energy meant representing 100 million atoms, 16,000 lipids, and 101 proteins, the contents of a tiny sphere-shaped organelle occupying just one percent of the cell's total volume. The team used the Titan supercomputer at the Oak Ridge National Laboratory in Tennessee. At his death Schulten was already planning simulations for the exa-scale Summit computer, expected to be built by 2018.