We discuss in detail the implementation of an open-system quantum simulator with Rydberg states of neutral atoms held in an optical lattice. Our scheme allows one to realize both coherent as well as dissipative dynamics of complex spin models involving many-body interactions and constraints. The central building block of the simulation scheme is constituted by a mesoscopic Rydberg gate that permits the entanglement of several atoms in an efficient, robust and quick protocol. In addition, optical pumping on ancillary atoms provides the dissipative ingredient for engineering the coupling between the system and a tailored environment. As an illustration, we discuss how the simulator enables the simulation of coherent evolution of quantum spin models such as the two-dimensional Heisenberg model and Kitaevs toric code, which involves four-body spin interactions. We moreover show that in principle also the simulation of lattice fermions can be achieved. As an example for controlled dissipative dynamics, we discuss ground state cooling of frustration-free spin Hamiltonians.
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