Unmanned aerial vehicles (UAVs) have been become important day by day because of advantages in our life use cases; specially, they can play important role in the industry 4.0 concept such as automation in production plants. System engineering approach is planning the design and production phases. Every system, subsystem, component, or mission of the systems are investigated before project starts and each requirement is set. The investigation of compatibility between systems and products minimizes the risks during the production phases. This paper proposes the usage of system engineering approach to the conceptual design of an UAV navigation system which aims to be used in indoor environments. In order to provide autonomous indoor flight, system requirements are set by using system engineering approach. Then step by step, the basic functions that UAV needs to complete operation are specified. The required products are listed as a tree and the relation between products and functions are investigated. Thus, the conceptual design of the UAV indoor navigation system is demonstrated by using of the functional tree, the functions and product relation matrix, the product tree, and the use cases. Moreover, the system operational requirements are investigated, and the requirement operation phases, modes and use cases are also determined. Thanks to system engineering, all these complex systems are put together systematically, and the conceptual design is achieved.