A lock-in amplifier is a versatile instrument frequently used in physics research. However, many students struggle with the basic operating principles of a lock-in amplifier which can lead to a variety of difficulties. To improve students' understanding, we have been developing and evaluating a research-based tutorial which makes use of a computer simulation of a lock-in amplifier. The tutorial is based on a field-tested approach in which students realize their difficulties after predicting the outcome of simulated experiments involving a lock-in amplifier and check their predictions using the simulated lock-in amplifier. Then, the tutorial provides guidance and strives to help students develop a coherent understanding of the basics of a lock-in amplifier. The tutorial development involved interviews with physics faculty members and graduate students and iteration of many versions of the tutorial with professors and graduate students. The student difficulties with lock-in amplifiers and the development and evaluation of the research-based tutorial to help students develop a functional understanding of this device are discussed.