This paper presents a physics-of-failure (PoF)-based prognostics and health management approach for effective reliability prediction. PoF is an approach that utilizes knowledge of a product's life cycle loading and failure mechanisms to perform reliability design and assessment. PoF-based prognostics permit the assessment of product reliability under its actual application conditions. It integrates sensor data with models that enable in situ assessment of the deviation or degradation of a product from an expected normal operating condition (ie, the product's 'health') and the prediction of the future state of reliability. A formal implementation procedure, which includes failure modes, mechanisms, and effects analysis, data reduction and feature extraction from the life cycle loads, damage accumulation, and assessment of uncertainty, is presented. Then, applications of PoF-based prognostics are discussed.