We present the Potsdam Parallel Ice Sheet Model (PISM-PIK), developed at the Potsdam Institute for Climate Impact Research to be used for simulations of large-scale ice sheet-shelf systems. It is derived from the Parallel Ice Sheet Model (Bueler and Brown, 2009). Velocities are calculated by superposition of two shallow stress balance approximations within the entire ice covered region: the shallow ice approximation (SIA) is dominant in grounded regions and accounts for shear deformation parallel to the geoid. The plug-flow type shallow shelf approximation (SSA) dominates the velocity field in ice shelf regions and serves as a basal sliding velocity in grounded regions. Ice streams can be identified diagnostically as regions with a significant contribution of membrane stresses to the local momentum balance. All lateral boundaries in PISM-PIK are free to evolve, including the grounding line and ice fronts. Ice shelf margins in particular are modeled using Neumann boundary conditions for the SSA equations, reflecting a hydrostatic stress imbalance along the vertical calving face. The ice front position is modeled using a subgrid-scale representation of calving front motion (Albrecht et al., 2011) and a physically-motivated calving law based on horizontal spreading rates. The model is tested in experiments from the Marine Ice Sheet Model Intercomparison Project (MISMIP). A dynamic equilibrium simulation of Antarctica under present-day conditions is presented in Martin et al. (2011).