As of January 1, 2008, the total State prison capacity was 157,566 beds. Projected incarceration populations at the end of each biennium are 155,005 for 2008-09 and 155,096 for 2010-11. Both figures are below the anticipated State operating capacity. The expansion of the diversion and treatment programs is projected to decrease prison admissions. Using findings from prior research in this area, the diversion rate for these programs was estimated at 50 percent, meaning that 50 percent of those placed in diversion beds would have been revoked or sentenced to prison if the facilities were not available. For each fiscal year from 2008 through 2012, a table provides data on the updated population trend, January 2008 diversion projection, State operating capacity, updated population trend, and January 2008 diversion projection. The adult incarceration population projection is based on a discrete-event simulation modeling approach that results from the movement of individual offenders into, through, and out of the Texas Department of Criminal Justice (TDCJ). Discrete-event simulation focuses on the modeling of a system over time as a dynamic process. The model simulates offender movement through the system based on his/her offense type, sentence length, and time credited to the current sentence. The major drivers of the projected adult incarceration population are future admissions and release. Admissions are based on at-risk populations, court conviction rates, and probation and parole revocations. Future releases are largely driven by release-approval decisions. 2 tables and 6 figures