In this paper the software environment and algorithm collection ACADO Toolkit is presented, which implements tools for automatic control and dynamic optimization. It provides a general framework for using a great variety of algorithms for direct optimal control, including model predictive control as well as state and parameter estimation. The ACADO Toolkit is implemented as a self‐contained C++ code, while the object‐oriented design allows for convenient coupling of existing optimization packages and for extending it with user‐written optimization routines. We discuss details of the software design of the ACADO Toolkit 1.0 and describe its main software modules. Along with that we highlight a couple of algorithmic features, in particular its functionality to handle symbolic expressions. The user‐friendly syntax of the ACADO Toolkit to set up optimization problems is illustrated with two tutorial examples: an optimal control and a parameter estimation problem. Copyright © 2010 John Wiley & Sons, Ltd.