Abstract In recent years, the aviation industry has witnessed a transformative wave of innovation in electrified aircraft propulsion (EAP), driven by sustainability and efficiency goals. Integration of novel electrical subsystems, including high-voltage power electronics, motors/generators, and energy storage devices, has introduced intricate complexities. In this context, an intensified focus on Prognostics and Health Management (PHM) is imperative, considering the heightened reliability needs in a transportation propulsion application. This paper analyzes the current state-of-the-art in PHM applicable to various EAP systems and components crucial for the functioning of electric aircraft. Typical fault modes and fault management strategies are analyzed at various levels of systems hierarchy. An integral aspect of our investigation involves the identification of critical gaps within existing PHM frameworks, guiding the research agenda for enhanced reliability and performance. Moreover, the distributed nature and complexity of EAP systems underscore the importance of Model-Based Systems Engineering (MBSE). We advocate for the exploration of MBSE not only to inform the design of PHM solutions but also to facilitate certification and Verification and Validation activities. Additionally, the paper offers insights into existing tools and simulation software capable of integrating traditional gas turbine modules with electric subsystems, as well as simulating various faulty conditions in EAP relevant to PHM development. Key gaps in these tools are emphasized, drawing attention to areas that require further refinement and development. This comprehensive exploration aims to pave the way for future advancements in PHM tailored for the unique challenges posed by EAP systems.