Development of tolerance analysis methods that are consistent with the ASME and ISO GD&T (geometric dimensioning and tolerancing) standards is a challenging task. Such methods are the basis for creating computer-aided tools for 3D tolerance analysis and assemblability analysis. These tools, along with the others, make it possible to realize virtual manufacturing, in order to shorten lead-time and reduce cost in the product development process. Current simulation tools for 3D tolerance analysis and assemblability analysis are far from satisfactory because the underlying variation algorithms are not fully consistent with the GD&T standards. Better algorithms are still to be developed. Towards that goal, this paper proposes a complete algorithm for 3D slot features and tab features (frequently used in mechanical products) for 3D simulation-based tolerance analysis. The algorithms developed account for bonus/shift tolerances (i.e. effects from material condition specifications), and tolerance zone interaction when multiple tolerances are specified on the same feature. A case study is conducted to demonstrate the algorithm developed. The result from this work is compared with that from ID tolerance chart method. The comparison study shows quantitatively why ID tolerance chart method, which is popular in industry, is not sufficient for tolerance analysis, which is 3D in nature.