We present and evaluate HYDRA, a virtualized testbed for realistic large-scale network simulations. While classic simulation tools only provide approximations of the protocol stack, HYDRA virtualizes nodes running a complete Linux system. Mobility models and connection management integrated into HYDRA allow for the simulation of various wireless networking scenarios. Our distributed virtualization approach achieves excellent scalability and the automated node setup makes it easy to deploy large setups with hundreds of nodes. Hardware-in-the-loop simulations are possible, using HYDRA to augment a testbed of real devices. The ability to boot a HYDRA node completely from an USB flash drive enables the user to convert temporarily unused computer resources into a testbed without the need for any complex setup.