This paper focuses on a novel hardware-in-the-loop (HIL) system designed for developing the automatic operation of the axle lifting and dropping system for heavy trucks for compliance with the European Union Mass and Dimensions Policy and for evaluating the developed system for different axle loading, road slippage, truck speed, handbrake position and driver input combinations. Such a system is expected to be advantageous over manual operation in fuel consumption, tire wear, road surface damage and ease of taking off on slippery surfaces. An auto lift/drop algorithm in the form of a State Transition Diagram (STM) was developed to meet these requirements and has been implemented in the developed HIL simulation system that contains mechanical, pneumatic, electrical and control elements and a TruckMaker simulation model. In the HIL simulator, the electronic control unit (ECU) operated as if it is working in the real truck. Comprehensive scenarios can be generated and executed in this HIL simulation environment to test the algorithm and the set-up itself before the more expensive and time consuming experimental verification with a real truck. This approach allowed the lift axle automation algorithm and hardware to be tested fully in a safe lab environment where the algorithm could be improved and optimized Results of the HIL simulation verified the advantages of such an automated lift axle lifting and dropping system over manually operated axle dropping systems. The developed system was successfully implemented later in a truck and was used in series production trucks.