Avian influenza, or “bird flu”, is a contagious disease of animals caused by viruses that normally infect only birds; however there exist a dramatic number of infected human cases. This research aims to understand the dynamics of avian influenza epidemics in a closed, finite area by using system dynamics methodology. The model is a network that links wild bird, duck, poultry and human population sectors which are formed by several classical SIR-model building blocks. The dynamics of recent outbreak is analyzed with a base model; additionally some scenario and policy analyses are done with modified models. The simulation experiments show that a highly pathogenic avian influenza outbreak is highly dependant on the density of poultry population in the region. Growing duck and poultry populations pose a great risk. A policy involving the recognition and quarantining of low pathogenic virus infected birds is suggested at the end as a tentative one.