Natural phenomena simulation attracts a lot of research attention and interest in virtual reality. The simulation for liquid has become a research focus in both computer graphics and computational physics, because of the difficulties in dynamic modelling and high computational complexity. We introduce the main research achievements in recent years with regard to liquids, which is a common natural phenomenon. A hybrid modelling approach for dynamic liquid simulation is proposed, followed by a surface reconstruction method using simulated results. In particle-based fluid simulation, surface construction is one procedure to contour the implicit function which determines an isosurface in a scalar field. We describe an adaptive polygonisation approach, by adaptively constructing an unconstrained octree structure, to reduce excessive subdivision which is required by traditional methods like Marching Cubes. Dual Marching Cubes is then applied to perform surface extraction on a new grid which is topologically dual to the octree structure. Experiment shows the advantages of our approach in generating satisfactory effects without excessively fine-grained grid structure. Satisfactory visual effect is achieved and this application can be used in computer games, movie making and virtual simulation in medical areas.