A method and system for performing continuous (real-time) physics based prognostics analysis as a function of actual engine usage and changing operating environment. A rule-based mission profile analysis is conducted to determine the mission variability which yields variability in the type of thermal-mechanical loads that an engine is subjected to during use. This is followed by combustor modeling to predict combustion liner temperatures and combustion nozzle plane temperature distributions as a function of engine usage which is followed by off-design engine modeling to determine the pitch-line temperatures in hot gas path components and thermodynamic modeling to compute the component temperature profiles of the components for different stages of the turbine. This is automatically followed by finite element(FE) based non-linear stress-strain analysis using an real-time FE solver and physics based damage accumulation, life consumption and residual life prediction analyses using microstructural modeling based damage and fracture analysis techniques.