A failure analysis system identifies a root cause of a failure (or other health issue) in a virtualized computing environment and provides a recommendation for remediation. The failure analysis system uses a model-based reasoning (MBR) approach that involves building a model describing the relationships/dependencies of elements in the various layers of the virtualized computing environment, and the model is used by an inference engine to generate facts and rules for reasoning to identify an element in the virtualized computing environment that is causing the failure. Then, then the failure analysis system uses a decision tree analysis (DTA) approach to perform a deep diagnosis of the element, by traversing a decision tree that was generated by combining the rules for reasoning provided by the MBR approach, in conjunction with examining data collected by health monitors. The result of the DTA approach is then used to generate the recommendation for remediation.