Modeling air pollutant transport and dispersion in urban environments is especially challenging due to complex ground topography. In this study, we describe a large eddy simulation (LES) tool including a new dynamic subgrid closure and boundary treatment to model urban dispersion problems. The numerical model is developed, validated, and extended to a realistic urban layout. In such applications fairly coarse grids must be used in which each building can be represented using relatively few grid-points only. By carrying out LES of flow around a square cylinder and of flow over surface-mounted cubes, the coarsest resolution required to resolve the bluff body’s cross section while still producing meaningful results is established. Specifically, we perform grid refinement studies showing that at least 6-8 grid points across the bluff body are required for reasonable results. The performance of several subgrid models is also compared. Although effects of the subgrid models on the mean flow are found to be small, dynamic Lagrangian models give a physically more realistic subgridscale (SGS) viscosity field. When scale-dependence is taken into consideration, these models lead to more realistic resolved fluctuating velocities and spectra. These results set the minimum grid resolution and subgrid model requirements needed to apply LES in simulations of neutral atmospheric boundary layer flow and scalar transport over a realistic urban geometry. The results also illustrate the advantages of LES over traditional modeling approaches, particularly its ability to take into account the complex boundary details and the unsteady nature of atmospheric boundary layer flow. Thus LES can be used to evaluate probabilities of extreme events (such as probabilities of exceeding threshold pollutant concentrations). Some comments about computer resources required for LES are also included.