Accurate simulation of viscous fluid flows with deforming droplets creates a number of challenges. This thesis identifies these principal challenges and develops a numerical methodology to overcome them. Two-dimensional viscosity-dominated fluid flows are exclusively considered in this work. Such flows find many applications, for example, within the large and growing field of microfluidics; accurate numerical simulation is of paramount importance for understanding and exploiting them. A boundary integral method is presented which enables the simulation of droplets and solids with a very high fidelity. The novelty of this method is in its ability to accurately handle close interactions of drops, and of drops and solid boundaries, including b...