Abstract We discuss the computational bottlenecks in molecular dynamics (MD) and describe the challenges in parallelizing the computation-intensive tasks. We present a hybrid algorithm using MPI (Message Passing Interface) with OpenMP threads for parallelizing a generalized MD computation scheme for systems with short range interatomic interactions. The algorithm is discussed in the context of nano-indentation of Chromium films with carbon indenters using the Embedded Atom Method potential for Cr–Cr interaction and the Morse potential for Cr–C interactions. We study the performance of our algorithm for a range of MPI–thread combinations and find the performance to depend strongly on the computational task and load sharing in the multi-core processor. The algorithm scaled poorly with MPI and our hybrid schemes were observed to outperform the pure message passing scheme, despite utilizing the same number of processors or cores in the cluster. Speed-up achieved by our algorithm compared favorably with that achieved by standard MD packages.