Improved urban mobility can be attained through more efficient vehicle usage and better road network utilization, namely through increased vehicle occupancy and new operation modes. In this paper we focus on a dynamic and distributed taxi-sharing system that takes advantage of nowadays widespread availability of communication and distributed computation to provide a cost-efficient, door-to-door and flexible service, offering a quality of service similar to conventional taxis. This system has been evaluated following a Simulation Modelling Approach, including a realistic and accurate replication of the taxi operation in the city of Porto using empirical data (real origin/destination data and average occupancy rates). Simulation results show improved performance in terms of reduced fares (up to 8%), reduced total travel distance (up to 9%) and smaller operation costs. Furthermore, we proposed that several trade-offs (e.g. service performance versus passengers’ transit times) should be considered during the system deployment and operation. In the study it was also shown that increased system penetration rate and demand level can even further improve the system performance.