<PAGE>   1





  As filed with the Securities and Exchange Commission on December 22, 1997 
                                                Registration No. 333-__________
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C.  20549
                                -----------------
                                    FORM S-8
                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933
                                -----------------
                           MECHANICAL DYNAMICS, INC.
            (Exact name of registrant as specified in its charter)

                   MICHIGAN                                    38-2163045
        (State or other jurisdiction of                     (I.R.S. Employer
        incorporation or organization)                     Identification No.)

2301 COMMONWEALTH BLVD., ANN ARBOR, MICHIGAN                      48105
   (Address of Principal Executive Offices)                     (Zip Code)

        MECHANICAL DYNAMICS 1996 STOCK INCENTIVE PLAN FOR KEY EMPLOYEES
                            (Full title of the plan)

                             MICHAEL E. KORYBALSKI
                            CHIEF EXECUTIVE OFFICER
                           MECHANICAL DYNAMICS, INC.
                            2301 COMMONWEALTH BLVD.
                           ANN ARBOR, MICHIGAN  48105
                    (Name and address of agent for service)

                                 (313) 994-3800
         (Telephone number, including area code, of agent for service)


                       CALCULATION OF REGISTRATION FEE
================================================================================
<TABLE>
<CAPTION>
       Title of                                     Proposed                 Proposed
      securities               Amount                maximum                 maximum             Amount of
        to be                   to be            offering price             aggregate           registration
      registered             registered            per share             offering price             fee                         
------------------------------------------------------------------------------------------------------------------------------------
<S>                      <C>                     <C>                    <C>                     <C>

Common Stock (1)         200,000 shares           $  7.03   (2)         $ 1,406,000.00   (2)     $ 485.00
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1)  No par value per share (the "Common Stock").  
(2)  Calculated pursuant to Rule 457(h) under the Securities Act of 1933, as 
     amended, solely for the purpose of computing the registration fee and 
     based on the average of the high and low prices of the Common Stock as
     quoted on The Nasdaq National Market on December 19, 1997.


                               Page 1 of 6 Pages
                           Exhibit Index is on Page 6



<PAGE>   2


         The contents of the Form S-8 Registration Statement, File No.
333-17957 (the "Prior Registration Statement"), of Mechanical Dynamics, Inc.
(the "Registrant") are incorporated in this Form S-8 Registration Statement by
reference.


                                    PART II

               INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

ITEM 3.  INCORPORATION OF DOCUMENTS BY REFERENCE.

         The documents listed below are incorporated by reference in this
         registration statement:

         1.      The Annual Report of Mechanical Dynamics, Inc. (the
         "Registrant") on Form 10-K for the fiscal year ended December 31, 1996
         as filed with the Securities and Exchange Commission (the
         "Commission") pursuant to the Securities Exchange Act of 1934, as
         amended (the "Exchange Act").

         2.      The Quarterly Reports of the Registrant on Form 10-Q for the
         quarters ended March 31, 1997, June 30, 1997 and September 30, 1997
         and any other reports filed by the Registrant pursuant to Sections
         13(a) or 15(d) of the Exchange Act, since the end of the fiscal year
         ended December 31, 1996.

         3.      The description of the Registrant's Common Stock included in
         the Registrant's Prospectus under the caption "Description of Capital
         Stock" on pages 48 through 49 of the Registrant's Prospectus, dated
         May 14, 1996, filed with the Commission pursuant to the Securities Act
         of 1933, as amended (the "Securities Act"), as part of its
         Registration Statement on Form S-1 (File No. 333-2900), effective May
         14, 1996 (the "Registration Statement"), and incorporated by reference
         into the Registrant's Registration Statement on Form 8-A, effective
         May 14, 1996 and filed with the Commission pursuant to the Exchange
         Act, including any amendment or report filed for the purpose of
         updating such description.

         All documents subsequently filed by the Registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of
a post-effective amendment which indicates that all securities offered have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference in this Registration Statement and to be
part hereof from the date of filing of such documents.

ITEM 8.  EXHIBITS.

         4.1     Restated Articles of Incorporation, incorporated by reference
                 to Exhibit 3.2 to the Registrant's Registration Statement on
                 Form S-1, File No. 333-2900

         4.2     Restated Bylaws incorporated by reference to Exhibit 3.4 to
                 the Registrant's Registration Statement on Form S-1, File No.
                 333- 2900

         5.1     Opinion of Honigman Miller Schwartz and Cohn




                                      2


<PAGE>   3


         23.1    Consent of Arthur Andersen LLP

         23.2    Consent of Honigman Miller Schwartz and Cohn (included in the
                 opinion filed as Exhibit 5.1 to this Registration Statement)

         24.1    Powers of Attorney (included after the signature of the
                 Registrant contained on page 4 of this Registration Statement)

         99.3    Mechanical Dynamics, Inc. 1996 Stock Incentive Plan for Key
                 Employees, incorporated by reference as Exhibit 10.9 in the
                 Registrant's Registration Statement on Form S-1, File No.
                 333-2900





                                       3



<PAGE>   4

                                   SIGNATURES




         Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Ann Arbor, State of Michigan, on December 16,
1997.


                                        MECHANICAL DYNAMICS, INC.



                                        By:/s/ Michael E. Korybalski 
                                           ------------------------------------
                                           Michael E. Korybalski 
                                           Its:  Chief Executive Officer




                               POWER OF ATTORNEY


         KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned officers
and directors of MECHANICAL DYNAMICS, INC., a Michigan corporation (the
"Company"), hereby constitutes and appoints Michael E. Korybalski and David
Peralta, and each of them, the true and lawful attorneys-in-fact and agents of
the undersigned, each with the power of substitution for him in any and all
capacities, with full power and authority in said attorneys-in-fact and agents
and in any one or more of them, to sign, execute and affix his seal thereto and
file the proposed registration statement on Form S-8 to be filed by the Company
under the Securities Act of 1933, as amended, which registration statement
relates to the registration and issuance of the Company's Common Stock,
pursuant to the Mechanical Dynamics, Inc. 1996 Stock Incentive Plan For Key
Employees, and any of the documents relating to such registration statement, any
and all amendments to such registration statement, including any amendment
thereto changing the amount of securities for which registration is being
sought, and any post-effective amendment, with all exhibits and any and all
documents required to be filed with respect thereto with any regulatory
authority; granting unto said attorneys, and each of them, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises in order to effectuate the same
as fully to all intents and purposes as he might or could do if personally
present, hereby ratifying and confirming all that said attorneys-in-fact and
agents, and each of them, may lawfully do or cause to be done by virtue hereof.





                                       4
<PAGE>   5

         Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.


<TABLE>
<CAPTION>                                                                                                   
              Signature                                Title                                 Date
              ---------                                -----                                 ----


<S>                                        <C>                                       <C>

/s/ Michael E. Korybalski                  Chief Executive Officer and               December 16, 1997
------------------------------------         Director (Principal Executive Officer)
        Michael E. Korybalski                



/s/ David Peralta                          Vice President and Chief Financial        December 16, 1997
------------------------------------         Officer (Principal Financial Officer
            David Peralta                    and Principal Accounting Officer)
            


/s/ John C. Angell                         Vice President, Chief Technical           December 17, 1997
------------------------------------          Fellow and Director                                                         
           John C. Angell                    



/s/ Herbert S. Amster                      Director                                  December 17, 1997
------------------------------------                                                                  
          Herbert S. Amster



/s/ Joseph F. Gloudeman                    Director                                  December 18, 1997
------------------------------------                                                                  
         Joseph F. Gloudeman



/s/ David E. Cole                          Director                                  December 15, 1997
------------------------------------                                                                  
            David E. Cole



/s/ Mitchell I. Quain                      Director                                  December 16, 1997
------------------------------------                                                                  
          Mitchell I. Quain



/s/ Robert R. Ryan                         President, Chief Operating                December 16, 1997
------------------------------------         Officer and Director                                                         
           Robert R. Ryan                    



</TABLE>


                                       5





<PAGE>   6

                               INDEX TO EXHIBITS


<TABLE>
<CAPTION>
Exhibit
Number                                                               Exhibit                                          Page No.
------                                                               -------                                          --------
<S>              <C>                                                                                                  <C>

4.1              Restated Articles of Incorporation, incorporated by reference to Exhibit 3.2                            --
                 to the Registrant's Registration Statement on Form S-1, File No. 333-2900

4.2              Restated Bylaws incorporated by reference to Exhibit 3.4 to the Registrant's                            --
                 Registration Statement on Form S-1, File No. 333-2900

5.1              Opinion of Honigman Miller Schwartz and Cohn                                                            7

23.1             Consent of Arthur Andersen LLP                                                                          8

23.2             Consent of Honigman Miller Schwartz and Cohn (included                                                  
                 in the opinion filed as Exhibit 5.1 to this Registration Statement)                                     --

24.1             Powers of Attorney (included after the signature of the                                                 
                 Registrant contained on page 4 of this Registration Statement)                                          --

99.3             Mechanical Dynamics, Inc. 1996 Stock Incentive Plan for Key Employees,                                  
                 incorporated by reference as Exhibit 10.9 in the Registrant's Registration 
                 Statement on Form S-1, File No. 333-2900                                                                --
</TABLE>







                                       6
[{"type": "S-8", "sequence": "1", "description": "FORM S-8", "secsgml_size_bytes": 14163}]
{"company-data": {"conformed-name": "MECHANICAL DYNAMICS INC \\MI\\", "cik": "0001011451", "assigned-sic": "5045", "irs-number": "382163045", "state-of-incorporation": "MI", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-8", "act": "33", "file-number": "333-42909", "film-number": "97742273"}, "business-address": {"street1": "2301 COMMONWEALTH BLVD", "city": "ANN ARBOR", "state": "MI", "zip": "48105", "phone": "3139132509"}, "mail-address": {"street1": "2301 COMMONWEALTH BLVD", "city": "ANN ARBOR", "state": "MI", "zip": "48105"}}
1

  As filed with the Securities and Exchange Commission on December 22, 1997 
                                                Registration No. 333-__________
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C.  20549
                                -----------------
                                    FORM S-8
                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933
                                -----------------
                           MECHANICAL DYNAMICS, INC.
            (Exact name of registrant as specified in its charter)

                   MICHIGAN                                    38-2163045
        (State or other jurisdiction of                     (I.R.S. Employer
        incorporation or organization)                     Identification No.)

2301 COMMONWEALTH BLVD., ANN ARBOR, MICHIGAN                      48105
   (Address of Principal Executive Offices)                     (Zip Code)

        MECHANICAL DYNAMICS 1996 STOCK INCENTIVE PLAN FOR KEY EMPLOYEES
                            (Full title of the plan)

                             MICHAEL E. KORYBALSKI
                            CHIEF EXECUTIVE OFFICER
                           MECHANICAL DYNAMICS, INC.
                            2301 COMMONWEALTH BLVD.
                           ANN ARBOR, MICHIGAN  48105
                    (Name and address of agent for service)

                                 (313) 994-3800
         (Telephone number, including area code, of agent for service)

                       CALCULATION OF REGISTRATION FEE
================================================================================
Title of                                     Proposed                 Proposed
      securities               Amount                maximum                 maximum             Amount of
        to be                   to be            offering price             aggregate           registration
      registered             registered            per share             offering price             fee                         
------------------------------------------------------------------------------------------------------------------------------------
Common Stock (1)         200,000 shares           $  7.03   (2)         $ 1,406,000.00   (2)     $ 485.00
------------------------------------------------------------------------------------------------------------------------------------
(1)  No par value per share (the "Common Stock").  
(2)  Calculated pursuant to Rule 457(h) under the Securities Act of 1933, as 
     amended, solely for the purpose of computing the registration fee and 
     based on the average of the high and low prices of the Common Stock as
     quoted on The Nasdaq National Market on December 19, 1997.

                               Page 1 of 6 Pages
                           Exhibit Index is on Page 6
2

         The contents of the Form S-8 Registration Statement, File No.
333-17957 (the "Prior Registration Statement"), of Mechanical Dynamics, Inc.
(the "Registrant") are incorporated in this Form S-8 Registration Statement by
reference.

                                    PART II

               INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

ITEM 3.  INCORPORATION OF DOCUMENTS BY REFERENCE.

         The documents listed below are incorporated by reference in this
         registration statement:

         1.      The Annual Report of Mechanical Dynamics, Inc. (the
         "Registrant") on Form 10-K for the fiscal year ended December 31, 1996
         as filed with the Securities and Exchange Commission (the
         "Commission") pursuant to the Securities Exchange Act of 1934, as
         amended (the "Exchange Act").

         2.      The Quarterly Reports of the Registrant on Form 10-Q for the
         quarters ended March 31, 1997, June 30, 1997 and September 30, 1997
         and any other reports filed by the Registrant pursuant to Sections
         13(a) or 15(d) of the Exchange Act, since the end of the fiscal year
         ended December 31, 1996.

         3.      The description of the Registrant's Common Stock included in
         the Registrant's Prospectus under the caption "Description of Capital
         Stock" on pages 48 through 49 of the Registrant's Prospectus, dated
         May 14, 1996, filed with the Commission pursuant to the Securities Act
         of 1933, as amended (the "Securities Act"), as part of its
         Registration Statement on Form S-1 (File No. 333-2900), effective May
         14, 1996 (the "Registration Statement"), and incorporated by reference
         into the Registrant's Registration Statement on Form 8-A, effective
         May 14, 1996 and filed with the Commission pursuant to the Exchange
         Act, including any amendment or report filed for the purpose of
         updating such description.

         All documents subsequently filed by the Registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of
a post-effective amendment which indicates that all securities offered have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference in this Registration Statement and to be
part hereof from the date of filing of such documents.

ITEM 8.  EXHIBITS.

         4.1     Restated Articles of Incorporation, incorporated by reference
                 to Exhibit 3.2 to the Registrant's Registration Statement on
                 Form S-1, File No. 333-2900

         4.2     Restated Bylaws incorporated by reference to Exhibit 3.4 to
                 the Registrant's Registration Statement on Form S-1, File No.
                 333- 2900

         5.1     Opinion of Honigman Miller Schwartz and Cohn

                                      2
3

         23.1    Consent of Arthur Andersen LLP

         23.2    Consent of Honigman Miller Schwartz and Cohn (included in the
                 opinion filed as Exhibit 5.1 to this Registration Statement)

         24.1    Powers of Attorney (included after the signature of the
                 Registrant contained on page 4 of this Registration Statement)

         99.3    Mechanical Dynamics, Inc. 1996 Stock Incentive Plan for Key
                 Employees, incorporated by reference as Exhibit 10.9 in the
                 Registrant's Registration Statement on Form S-1, File No.
                 333-2900

                                       3
4

                                   SIGNATURES

         Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Ann Arbor, State of Michigan, on December 16,
1997.

                                        MECHANICAL DYNAMICS, INC.

                                        By:/s/ Michael E. Korybalski 
                                           ------------------------------------
                                           Michael E. Korybalski 
                                           Its:  Chief Executive Officer

                               POWER OF ATTORNEY

         KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned officers
and directors of MECHANICAL DYNAMICS, INC., a Michigan corporation (the
"Company"), hereby constitutes and appoints Michael E. Korybalski and David
Peralta, and each of them, the true and lawful attorneys-in-fact and agents of
the undersigned, each with the power of substitution for him in any and all
capacities, with full power and authority in said attorneys-in-fact and agents
and in any one or more of them, to sign, execute and affix his seal thereto and
file the proposed registration statement on Form S-8 to be filed by the Company
under the Securities Act of 1933, as amended, which registration statement
relates to the registration and issuance of the Company's Common Stock,
pursuant to the Mechanical Dynamics, Inc. 1996 Stock Incentive Plan For Key
Employees, and any of the documents relating to such registration statement, any
and all amendments to such registration statement, including any amendment
thereto changing the amount of securities for which registration is being
sought, and any post-effective amendment, with all exhibits and any and all
documents required to be filed with respect thereto with any regulatory
authority; granting unto said attorneys, and each of them, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises in order to effectuate the same
as fully to all intents and purposes as he might or could do if personally
present, hereby ratifying and confirming all that said attorneys-in-fact and
agents, and each of them, may lawfully do or cause to be done by virtue hereof.

                                       4
5

         Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
Signature                                Title                                 Date
              ---------                                -----                                 ----
/s/ Michael E. Korybalski                  Chief Executive Officer and               December 16, 1997
------------------------------------         Director (Principal Executive Officer)
        Michael E. Korybalski                

/s/ David Peralta                          Vice President and Chief Financial        December 16, 1997
------------------------------------         Officer (Principal Financial Officer
            David Peralta                    and Principal Accounting Officer)
            

/s/ John C. Angell                         Vice President, Chief Technical           December 17, 1997
------------------------------------          Fellow and Director                                                         
           John C. Angell                    

/s/ Herbert S. Amster                      Director                                  December 17, 1997
------------------------------------                                                                  
          Herbert S. Amster

/s/ Joseph F. Gloudeman                    Director                                  December 18, 1997
------------------------------------                                                                  
         Joseph F. Gloudeman

/s/ David E. Cole                          Director                                  December 15, 1997
------------------------------------                                                                  
            David E. Cole

/s/ Mitchell I. Quain                      Director                                  December 16, 1997
------------------------------------                                                                  
          Mitchell I. Quain

/s/ Robert R. Ryan                         President, Chief Operating                December 16, 1997
------------------------------------         Officer and Director                                                         
           Robert R. Ryan
5
6

                               INDEX TO EXHIBITS
Exhibit
Number                                                               Exhibit                                          Page No.
------                                                               -------                                          --------
4.1              Restated Articles of Incorporation, incorporated by reference to Exhibit 3.2                            --
                 to the Registrant's Registration Statement on Form S-1, File No. 333-2900

4.2              Restated Bylaws incorporated by reference to Exhibit 3.4 to the Registrant's                            --
                 Registration Statement on Form S-1, File No. 333-2900

5.1              Opinion of Honigman Miller Schwartz and Cohn                                                            7

23.1             Consent of Arthur Andersen LLP                                                                          8

23.2             Consent of Honigman Miller Schwartz and Cohn (included                                                  
                 in the opinion filed as Exhibit 5.1 to this Registration Statement)                                     --

24.1             Powers of Attorney (included after the signature of the                                                 
                 Registrant contained on page 4 of this Registration Statement)                                          --

99.3             Mechanical Dynamics, Inc. 1996 Stock Incentive Plan for Key Employees,                                  
                 incorporated by reference as Exhibit 10.9 in the Registrant's Registration 
                 Statement on Form S-1, File No. 333-2900                                                                --
6