Mantaflow is a unified simulation framework for both fluid and smoke simulations. It is currently integrated into Blender. BlenderDiplom will provide demos of the state of integration whenever new features arrive.
During the Google Summer of Code (GSoC) 2014 basic integration work of Mantaflow was conducted. The first goal was to be able to simulate using Mantaflow directly inside Blender. Piece by piece the Blender smoke simulation was substituted by Mantaflow. Recently, the first new feature was enabled: Fluid simulation. It's currently just a checkbox in the smoke settings and saves the fluid simulation result directly to Blender voxel data cache. The result is that you can render the simulation using Cycle's volume rendering capabilities even at very low simulation resolutions. Check out the first demos, there are no obstacles used because those are not supported yet and there are still issues with fluid dissapearing over time:
If you want to try it out and compile yourself, Mantaflow is available in the branch soc-2014-fluid.