This paper provides a credible approach for implementation of ISHM capability in any system. The requirements and processes to implement ISHM capability are unique in that a credible capability is initially implemented at a low level, and it evolves to achieve higher levels by incremental augmentation. In contrast, typical capabilities, such as thrust of an engine, are implemented once at full Functional Capability Level (FCL), which is not designed to change during the life of the product. The approach will describe core ingredients (e.g. technologies, architectures, etc.) and when and how ISHM capabilities may be implemented. A specific architecture/taxonomy/ontology will be described, as well as a prototype software environment that supports development of ISHM capability. This paper will address implementation of system-wide ISHM as a core capability, and ISHM for specific subsystems as expansions and evolution, but always focusing on achieving an integrated capability. © 2006 IEEE.