We analyze the diagnosis task in the context of adaptive design and redesign of physical devices. We identify three types of diagnosis tasks that differ in the types of information they take as input: the design does not achieve a desired function of the device, the design results in an undesirable behavior, and a specific structural element in the design misbehaves. We describe a model-based approach for solving the diagnosis task in the context of adaptive design and redesign. This approach uses functional models that explicitly represent the device functions and use them to organize teleological and causal knowledge about the device. In particular, we describe a specific kind of functional model called structure—behavior—function (SBF) models in which the causal behaviors of the device are specified in terms of flow of substances through components. We illustrate the use of SBF models with three examples from Kritik2, a knowledge system that designs new devices by retrieving, diagnosing, and adapting old device designs.