A physics-based approach for diagnostics and prognostics using integrated observers and life models is presented. Observers are filters based on physical models of machine- fault combinations and use measured machine signatures to identify and characterize the state of a machine. Observers are adaptively deployed as a machine wears and can be coupled with one another to handle interacting conditions and faults. The scheme is detailed using the fault of a cracked rotor shaft that interacts with gravity and imbalance. Observers for shaft cracking and imbalance are presented. The observers provide machine condition and fault strengths to life models used to determine remaining machine life. A life model based on the Forman crack growth law of linear elastic fracture mechanics is developed to determine the number of machine cycles remaining until catastrophic failure.© (2002) COPYRIGHT SPIE--The International Society for Optical Engineering. Downloading of the abstract is permitted for personal use only.