  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.
