A multimass energy-space Fokker-Planck code is used to follow the dynamical and luminosity evolution of an active galactic nucleus (AGN) model that consists of a dense stellar system surrounding a massive black hole. The stellar system contains stars with a realistic initial range of masses, 0.3-30 M., satisfying a power-law initial mass function. Stars lose mass by three mechanisms: (1) tidal disruption by the central black hole, (2) physical collisions between stars, and (3) stellar evolution. Over the range of initial central densities from 7 x 10(5) to 7 x 10(8) M. pc-3 considered in our models, we find that stellar evolution and tidal disruption are the predominant mass-loss mechanisms for low-density nuclei, whereas physical collisions dominate in high-density nuclei. For initial central densities greater than 10(7) M. pc-3 the core of the stellar system contracts due to the removal of kinetic energy by collisions, whereas for densities less than 10(7) M. pc-3 the core of the stellar system expands due to heating that results from the settling of a small population of stars into orbits tightly bound to the black hole. These mechanisms produce differing power-law slopes in the resulting stellar density cusp surrounding the black hole, -7/4 and -1/2 for low- and high-density nuclei, respectively. Peak luminosities for the models range from a few times 10(43) to nearly 10(48) ergs s-1 with an assumed constant black hole accretion photon efficiency of 0.1 and a Salpeter IMF. Effects of varying both the photon efficiency and the slope of the IMF are also explored.