The CP-PACS and JLQCD Collaborations have been made systematic studies of lattice QCD carrying out both chiral and continuum extrapolations. Importance of dynamical quark effects has been clarified by a comparison of quenched QCD and two flavor full QCD simulations. In two flavor simulations, the dynamical effects of u and d quarks are taken into account, but the third quark s is still treated in a quenched approximation. As the final step towards a fully realistic lattice simulation of QCD, two collaborations started a joint project of three flavor QCD, concentrating all big computers available. Based on a series of preparative studies of exact simulation algorithm and non-perturbative improvement coefficient, a large scale simulation of three flavor QCD has been started. I present the results of light hadron spectrum and light quark masses from the first production runs. © 2004 Elsevier B.V. All rights reserved.