A density matrix evolution(DME) method to simulate the dynamics of quantum systems embedded in a classical environment is presented. The method is applicable when the quantum dynamical degrees of freedom can be described in a Hilbert space of limited dimensionality. The method is applied to the case of proton-transfer reactions in a fluctuating double-well potential [details are given in the following paper in this issue] and compared to other analytical and numerical solutions. The embedding of the quantum system within the classical system by using consistent equations of motion for the classical system with-proper conservation properties is discussed and applied to the one-dimensional collision of a classical particle with a quantum oscillator.