In an effort to explore methods to improve overall system reliability, this systematic literature review (SLR) explores the current state of dynamic fault trees (DFTs) for complex, redundant systems that exhibit performance degradation over time. DFTs were first developed to manage and optimize redundant resources of computer system components, but have also been successfully used to manage redundant resources in aircraft and naval fuel distribution systems, transportation systems, industrial plants, computer networks, cardiac assist systems, and spacecraft systems. More recent DFT gates were added to identify, filter, and manage time‐dependent failures to minimize their impacts on the overall system performance and reliability, and have been applied to aircraft fault management systems, nuclear power plants, and alarm management systems. This SLR also explored the current state of technology for dynamically calculating not only the current capacity of system components, but also predicting their remaining useful life (RUL), remaining useful performance (RUP), and capacity degradation profiles. This is essential in understanding capacity degradation in the broader context of optimization of resources in complex, redundant systems. This SLR analysis revealed two gaps in the current technology and application of DFTs to complex systems. First, the usage of DFTs for failure management requires that the DFT is developed with a priori knowledge of specific failure modes, meaning that DFTs are inherently not scalable for new failures that are discovered. Second, although DFTs do address failure management, there are inherent limitations in the detection and application of partial failures or capacity degradation in the DFT infrastructure.