The Prognostic and Health Management (PHM) system of an aircraft has complex structures and diverse functions. It is highly coupled with other systems, such as the avionics system and flight management system. The Model-based Systems Engineering (MBSE) method is effective to support the design and verification of the aircraft PHM system. As a powerful semantic web construction method, ontology has been widely used to express design information, such as the concepts and the relationships between them. However, traditional graphical MBSE models have a natural weakness in transforming into ontology. In this paper, a semantic MBSE method is proposed to support the transform of the ontology model. Firstly, according to the design characteristics of the aircraft PHM system, a meta-model library of the aircraft PHM system is developed to support the design and evaluation. An MBSE modeling method based on requirement analysis, function analysis, logical architecture design, and physic architecture design is applied in the PHM design process. Secondly, the semantic system modeling language KARMA based on “graph, object, property, point, relationship, role, and extension” (GOPPRRE) is used to transfer the graphical MBSE model to the semantic MBSE model, which can be easily transformed to an ontology model. Finally, an ontology based on semantic modeling is developed to describe the MBSE entities and to support MBSE design. In this paper, a case study of an aircraft fuel PHM system is carried out to validate the proposed method. Based on the developed meta-model library, a complete MBSE design process for the aircraft PHM system is realized. And then an ontology model supporting PHM system design is generated from the semantic MBSE model. The MBSE ontology provides a shareable capability to help designers communicate effectively. Quantitative analysis based on ontology is also provided to verify the complexity and scale of the MBSE design process. Moreover, logical reasoning ability can also be provided to support the early requirement traceability for MBSE design. In general, the case study results show the feasibility and effectiveness of the proposed method for the aircraft PHM system design.