Product lifetime cost is largely determined by product lifetime reliability. In product design, the former is minimized while the latter is treated as a constraint and is usually estimated by statistical means. In this work, a new lifetime cost optimization model is developed where the product lifetime reliability is predicted with computational models derived from physical principles. With the physics-based reliability method, the state of a system is indicated by computational models, and the time-dependent system reliability is then predicted for a given set of distributions and stochastic processes in the model input. A sampling approach to extreme value distributions of input stochastic processes is employed to make the system reliability analysis efficient and accurate. The physics-based reliability analysis is integrated with the lifetime cost model. The integration enables the minimal lifetime costs including those of maintenance and warranty.Two design examples are used to demonstrate the proposed model.There are two kinds of reliability methodology: statistics based and physics based. The statisticsbased methods estimate the reliability based on experimental results and/or filed data. The physicsbased methods predict the reliability by computational models (limit-state functions) derived from physics. The former methods largely reside in the field of reliability engineering while the latter are often seen in the area of engineering design. In this work, the latter type is used. Since the input variables of the limit-state functions include design variables, such as the major dimensions, it is possible to adjust those design variables during the RBDO process so that an optimal balance between cost and reliability can be reached. Many physics-based reliability methodologies have been developed in recent decades (Huang, Chan, and Lou 2012;Hurtado and Alvarez 2012;Jensen, Kusanovic, and Valdebenito 2012;Kang et al. 2012;Sanchez-Silva, Klutke, and Rosowsky 2012). Design optimization with physics-based reliability (Du, Sudjianto, and Huang 2005;Du and Huang 2007;Du 2008;Du, Guo, and Beeram 2008) has been applied in various engineering fields to ensure that a design meets a specified reliability requirement.The major drawback of traditional physics-based RBDO (Du, Sudjianto, and Huang 2005;Du and Huang 2007;Du 2008;Du, Guo, and Beeram 2008) is that in many applications the reliability is a constant with respect to time. The reason is that the limit-state functions are time independent, e.g. a limit-state function involving only static stresses that do not change with time. As a result, there is no way to relate the predicted reliability with time-dependent activities, such as warranty and maintenance. This is the reason that only the initial development cost (not the lifetime cost) usually appears in the objective function in the traditional physics-based RBDO.In reality, reliability is time dependent. Theoretically, physics-based reliability methodologies are able to produce time-dependent reliability when li...