A global magnetohydrodynamic (MHD) simulation has been performed in order to investigate the outer boundaries of Neptune's magnetosphere at the time of Voyager 2's flyby in 1989 and to better understand the dynamics of magnetospheres formed by highly inclined planetary dipoles. Using the MHD code Gorgon, we have implemented a precessing dipole to mimic Neptune's tilted magnetic field and rotation axes. By using the solar wind parameters measured by Voyager 2, the simulation is verified by finding good agreement with Voyager 2 magnetometer observations. Overall, there is a large-scale reconfiguration of magnetic topology and plasma distribution. During the “pole-on” magnetospheric configuration, there only exists one tail current sheet, contained between a rarefied lobe region which extends outward from the dayside cusp, and a lobe region attached to the nightside cusp. It is found that the tail current always closes to the magnetopause current system, rather than closing in on itself, as suggested by other models. The bow shock position and shape is found to be dependent on Neptune's daily rotation, with maximum standoff being during the pole-on case. Reconnection is found on the magnetopause but is highly modulated by the interplanetary magnetic field (IMF) and time of day, turning “off” and “on” when the magnetic shear between the IMF and planetary fields is large enough. The simulation shows that the most likely location for reconnection to occur during Voyager 2's flyby was far from the spacecraft trajectory, which may explain the relative lack of associated signatures in the observations.