Inter-satellite links (ISLs) can improve the performance of the Global Navigation Satellite System (GNSS) in terms of precise orbit determination, communication, and data-exchange capabilities. This research aimed to evaluate a simulation-based processing strategy involving the exploitation of ISLs in orbit determination of Galileo satellites, which are not equipped with operational ISLs. The performance of the estimation process is first tested based on relative weighting coefficients obtained with methods of variance component estimation (VCE) varying in the complexity of the calculations. Inclusion of biases in the ISL measurements allows evaluation of the processing strategy and assessment of the impact of three different sets of ground stations: 44 and 16 stations distributed globally and 16 located in Europe. The results indicate that using different VCE approaches might lower orbit errors by up to 20% with a negligible impact on clock estimation. Depending on the applied ISL connectivity scheme, ISL range bias can be estimated with RMS between 10% to 30% of initial bias values. The accuracy of bias estimation may be associated with weighting approach and the number of ground stations. The results of this study show how introducing VCE with various simulation parameters into the processing chain might increase the accuracy of the orbit estimation.