AbstractBearings are widely used as a common mechanical component and significantly impacts the reliability and safety of various engineering equipment. In the field of large‐scale equipment such as wind turbines, statistical data for reliability and state prediction of bearings is usually limited, leading to the inapplicability of traditional statistical methods. Besides, individual differences commonly exist among bearings, and the appropriate failure threshold for a specific bearing is difficult to be determined due to the individual uncertainty, which may induce prediction errors. To address these issues, a novel operational reliability and state prediction method based on random threshold degradation hidden Markov model was proposed in the study. The traditional hidden Markov model was improved by considering the effect of performance degradation on state transition probability matrix. Moreover, random failure thresholds of performance degradation were employed to describe individual differences between bearings. The operational reliability and state of bearings was obtained by comprehensive analysis of prediction results under different failure thresholds. Verification of the proposed operational reliability and state prediction method were conducted using PHM2012 bearing operation data. The results underscored the effectiveness of the proposed method in achieving a comparatively high accuracy in operational reliability prediction without the prerequisite of an exact failure threshold, when contrasted with several established reliability and life prediction techniques.