diff --git a/src/device/simulator.ts b/src/device/simulator.ts
index 20d5cfa41..a7b9901e6 100644
--- a/src/device/simulator.ts
+++ b/src/device/simulator.ts
@@ -120,6 +120,11 @@ export type SensorStateKey = Extract<
 interface Config {
   language: string;
   translations: Record<string, string>;
+  /**
+   * If true, the simulator waits for serial output to be acknowledged via
+   * acknowledgeSerialOutput rather than limiting it to the device's baud rate.
+   */
+  serialFlowControl: boolean;
 }
 
 export interface DataLog {
@@ -318,6 +323,19 @@ export class SimulatorDeviceConnection
     this.setStatus(ConnectionStatus.Disconnected);
   }
 
+  /**
+   * Acknowledge serial output once it's been processed, so the simulator can
+   * send more.
+   *
+   * @param length The total length of the serial data processed.
+   */
+  acknowledgeSerialOutput(length: number): void {
+    // The iframe may have gone by the time the terminal finishes writing.
+    if (this.iframe()) {
+      this.postMessage("serial_output_ack", { length });
+    }
+  }
+
   async serialWrite(data: string): Promise<void> {
     this.postMessage("serial_input", {
       data,
diff --git a/src/serial/XTerm.tsx b/src/serial/XTerm.tsx
index eab1df359..72f0e4def 100644
--- a/src/serial/XTerm.tsx
+++ b/src/serial/XTerm.tsx
@@ -14,6 +14,7 @@ import useIsUnmounted from "../common/use-is-unmounted";
 import { backgroundColorTerm } from "../deployment/misc";
 import { SerialData } from "@microbit/microbit-connection/usb";
 import { parseTraceLine, useDevice } from "../device/device-hooks";
+import { SimulatorDeviceConnection } from "../device/simulator";
 import { useSelection } from "../workbench/use-selection";
 import { WebLinkProvider } from "./link-provider";
 import { useCurrentTerminalRef } from "./serial-hooks";
@@ -104,9 +105,20 @@ const useManagedTermimal = (
       customKeyEventHandler(e, tabOutRef)
     );
 
+    // The simulator waits for us to acknowledge serial output so a busy
+    // program can't send it faster than we can write it.
+    const acknowledge = (length: number) => {
+      if (device instanceof SimulatorDeviceConnection) {
+        device.acknowledgeSerialOutput(length);
+      }
+    };
     const serialListener = (event: SerialData) => {
+      const { length } = event.data;
       if (!isUnmounted()) {
-        terminal.write(event.data);
+        terminal.write(event.data, () => acknowledge(length));
+      } else {
+        // Discarded, but still acknowledged so the simulator doesn't wait.
+        acknowledge(length);
       }
     };
     const resetListener = () => {
diff --git a/src/simulator/Simulator.tsx b/src/simulator/Simulator.tsx
index 7c9b5b7eb..b8bb1b27a 100644
--- a/src/simulator/Simulator.tsx
+++ b/src/simulator/Simulator.tsx
@@ -45,10 +45,16 @@ const Simulator = ({
     const staging =
       "https://python-simulator.usermbit.org/staging/simulator.html?flag=sw";
 
-    // For testing with sim branches:
-    //const branch = "upgrade-mpy";
-    //const url = new URL(`https://review-python-simulator.usermbit.org/${branch}/simulator.html`);
-    const url = new URL(stage === "PRODUCTION" ? production : staging);
+    // For testing with sim branches.
+    // TODO: remove before merge, once the simulator is released.
+    const branch: string | undefined = "serial-output-flow-control";
+    const url = new URL(
+      branch
+        ? `https://review-python-simulator.usermbit.org/${branch}/simulator.html`
+        : stage === "PRODUCTION"
+        ? production
+        : staging
+    );
     url.searchParams.append("color", brand500);
     return url.toString();
   }, [brand500]);
@@ -163,6 +169,8 @@ const updateTranslations = (
         intl.formatMessage({ id: "simulator-" + k }),
       ])
     ),
+    // The terminal acknowledges serial output (see XTerm.tsx).
+    serialFlowControl: true,
   };
   simulator.configure(config);
 };