The screenshot shows shows the simulation of an ARDUINO using AVR microcontroller in PROTEUS.
The components used are
1) AVR microcontroller - ATMEGA328P
2) 2 x capacitor- generic , 22pf
3) crystal - 16MHz
Now write a simple program in Arduino IDE , save it and select the board type as shown in figure
Now click the upload button without connecting the arduino
At the end of this process you will get an error message , ignore this and make sure that an 'applet' directory is created at the location where you saved the program(it may be hidden) .In the applet directory you can see the .hex file generated.
For Linux users go to /tmp/ and search .hex
Now go back to the simulation , double click on the microcontroller to get the properties window and make the following selections
Now run the simulation , the following pin diagram will help you to find the corresponding AVR pin of each arduino pin .