In this paper we propose a new algorithm to simulate the dynamics of 3-D interacting rigid bodies. Six degrees of freedom are introduced to describe a single 3-D body or particle, and six relative motions and interactions are permitted between bonded bodies. We develop a new decomposition technique for 3-D rotation and pay particular attention to the fact that an arbitrary relative rotation between two coordinate systems or two rigid bodies can not be decomposed into three mutually independent rotations around three orthogonal axes. However, it can be decomposed into two rotations, one pure axial rotation around the line between the centers of two bodies, and another rotation on a specified plane controlled by another parameter. These two rotations, corresponding to the relative axial twisting and bending in our model, are sequence-independent. Therefore all interactions due to the relative translational and rotational motions between linked bodies can be uniquely determined using such a two-step decomposition technique. A complete algorithm for one such simulation is presented. Compared with existing methods, this algorithm is physically more reliable and has greater numerical accuracy.