The paper proposes a new adaptive approach to power system model reduction for fast and accurate time-domain simulation. This new approach is a compromise between linear model reduction for faster simulation and nonlinear model reduction for better accuracy. During the simulation period, the approach adaptively switches among detailed and linearly or nonlinearly reduced models based on variations of the system state: it employs unreduced models for the fault-on period, uses weighted column norms of the admittance matrix to decide which functions to be linearized in power system differential-algebraic equations for large changes of the state, and adopts a linearly reduced model for small changes of the state. Two versions of the adaptive model reduction approach are introduced. The first version uses traditional power system partitioning where the model reduction is applied to a defined large external area in a power system and the other area defined as the study area keeps full detailed models. The second version applies the adaptive model reduction to the whole system. The paper also conducts comprehensive case studies comparing simulation results using the proposed adaptively reduced models with the linearly reduced model on the Northeast Power Coordinating Council 140-bus 48-machine system.Index Terms--Linear model reduction, nonlinear model reduction, power system partitioning, power system simulation.