We present an implementation of smoothed particle hydrodynamics (SPH) with improved accuracy for simulations of galaxies and the large-scale structure. In particular, we combine, implement, modify and test a vast majority of SPH improvement techniques in the latest instalment of the GADGET code. We use the Wendland kernel functions, a particle wake-up time-step limiting mechanism and a time-dependent scheme for artificial viscosity, which includes a high-order gradient computation and shear flow limiter. Additionally, we include a novel prescription for time-dependent artificial conduction, which corrects for gravitationally induced pressure gradients and largely improves the SPH performance in capturing the development of gas-dynamical instabilities. We extensively test our new implementation in a wide range of hydrodynamical standard tests including weak and strong shocks as well as shear flows, turbulent spectra, gas mixing, hydrostatic equilibria and self-gravitating gas clouds. We jointly employ all modifications; however, when necessary we study the performance of individual code modules. We approximate hydrodynamical states more accurately and with significantly less noise than standard SPH. Furthermore, the new implementation promotes the mixing of entropy between different fluid phases, also within cosmological simulations. Finally, we study the performance of the hydrodynamical solver in the context of radiative galaxy formation and non-radiative galaxy cluster formation. We find galactic disks to be colder, thinner and more extended and our results on galaxy clusters show entropy cores instead of steadily declining entropy profiles. In summary, we demonstrate that our improved SPH implementation overcomes most of the undesirable limitations of standard SPH, thus becoming the core of an efficient code for large cosmological simulations.
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