The degradation of system performance during operation can be improved by different considerations. One of the methods is to take the preventive replacement for the key components. In this paper we propose a methodology of the replacement scheduling of key components in a system. A hierarchical structure for the assessment is built based on the intrinsic and extrinsic characteristics of the system. In the first stage the key components are identified through the consideration of replaceability, failure consequence and life. After that, the priority of replacement is decided by the evaluation of reliability and economics of the selected components. As to the replacement time it is determined according to maximizing the operation profit. The procedures for deciding the priority and replacement time are repeated for the next action, until the replacement profit is less than that without replacement. The suggested approach can be applied to maintain the performance of some profit-oriented mechanical system in a better way, e.g. vehicle, machine tool system, etc. Finally, the replacement scheduling of a hydraulic system is used to demonstrate the proposed methodology. (C) 1998. Published by Elsevier Science Limited.