A method based on structural modelling is developed for failure evaluation and analysis of mechatronics-based production systems. Majority of the elements in production systems are mechatronics-based, which includes various elements such as; electrical, electronic and mechanical. Each of these may have different failure types that may be interdependence/interactive. The reliability of the system mainly depends on how well the failures are taken care of during design stage. In general, individual failures are generalized into probable failure modes and early identification of these helps to reduce their probability. However, consideration of failures and their interdependence / interactions will help to evaluate and analyse the failures of complicated systems in an efficient and effective manner and increase the inherent system reliability. The system structure modeling helps in this regard. Digraph model, in conjunction with matrix method, is employed for failure evaluation and analysis of a mechatronics-based production system based on its structure.