Abstract: The use of knowledge engineering in diagnostic systems, is aimed primarily at exploiting procedural knowledge (about: systems operations, configuration, observations, calibration, maintenance), in connection with failure detection and test generation tasks. Next, the goal is to devise knowledge representation schemes whereby the failure events can be analyzed by merging highly diverse sources of information: analog/digital signals, logical variables and test outcomes, text from verbal reports, and inspection images. The final goal is to ease the operator workload when interfacing with the system under test and/or the test equipment, or with reliability assessment software packages. The paper will present key notions, methods and tools from: knowledge representation, inference procedures, pattern analysis. This will be illustrated by reference to a number of current and potential applications for e.g.: electronics failure detection, control systems testing, analysis of intermittent failures, false alarm reduction, test generation, maintenance trainers.