Suppose that R is an associative unital ring and that E= (E-0, E-1, r, s) is a directed graph. Using results from graded ring theory, we show that the associated Leavitt path algebra L-R(E) is simple if and only if R is simple, E-0 has no nontrivial hereditary and saturated subset, and every cycle in E has an exit. We also give a complete description of the centre of a simple Leavitt path algebra.