We perform numerical simulations of lattice QCD with two flavors of dynamical overlap quarks, which have exact chiral symmetry on the lattice. While this fermion discretization is computationally demanding, we demonstrate the feasibility to simulate reasonably large and fine lattices by a careful choice of the lattice action and algorithmic improvements. Our production runs are carried out on a 16^3 times 32 lattice at a single lattice spacing around 0.12 fm. We explore the sea quark mass region down to m_s/6, where m_s is the physical strange quark mass, for a good control of the chiral extrapolation in future calculations of physical observables. We describe in detail our setup and algorithmic properties of the production simulations and present results for the static quark potential to fix the lattice scale and the locality of the overlap operator.
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