Prognostic and Health Management (PHM) describes a set of capabilities that enable effective and efficient approaches towards data analysis for fault diagnostics and failure prognostics. This can support decision making related to health management, sustainment and operation of critical systems, such as aviation systems. As a result of the rapidly growing interest in PHM, a substantial amount of research proposes and discusses PHM frameworks and system architectures. Many research efforts regarding PHM frameworks focus on technical aspects, such as techniques associated with big data, cloud-based distribution or open facilities. Several papers propose specific PHM system architectures based on different frameworks. In addition, several authors address the derivation of PHM system architectures from system requirements (related to functions, behaviours, structures) using a systems engineering perspective. However, further interpretations of PHM system architecture derived from requirements in functional view are lacking. Moreover, the PHM system operates as a system of systems as it results from the combination of aviation systems, airline operational systems, and other ground health management hosting systems. In both research and industry, these systems are discussed and designed independently, whereas they need to be integrated to offer monitoring functions and services. Research of PHM architecture allowing communication and integration with the various contributing systems is lacking. To address these gaps, this research outlines an architecture design methodology incorporating a functional view from a systems engineering perspective. In addition, it proposes a functional architecture for PHM system as the application of the methodology. This proposed architecture is derived from associated functions and requirements to identify the functional elements, system boundary and the external/internal interactions of PHM system, to ensure the traceability and efficiency of architecture design. It also has compatibility and interoperability to integrate with the various systems, due to its compliance with the standard of Open System Architecture for Condition-Based Maintenance (OSA-CBM). A Case Study is conducted to verify the functional hierarchy and interactions and to demonstrate the compatibility and applicability through a compliance matrix. Furthermore, architecture models are established using System Modeling Language (SysML) through structural diagrams to represent the static structure and interactions. These models also sustain the integration with a variety of other information or management systems that together enable an organization to operate efficiently and competitively using health monitoring services through OSA-CBM.