The formation and development history of prognostic and health management (PHM) are reviewed, the differences between PHM and traditional test technology are compared from leading idea, key technology, application level and fault response method. The basic principle of PHM is discussed. The condition based maintenance (CBM) is proposed by introducing the health status classification and health degradation process of the system, the differences between CBM and breakdown maintenance and periodic maintenance are also analyzed. According to the capacity requirement of PHM, the task and flow are discussed. Aiming at the typical PHM technology based on the sensor system, the system composition is introduced, and the selection principle of the sensor system is studied combing with the practical application. Some advice about key technologies such as PHM method and selection of monitoring parameters are given.