Reliability is an important issue to consider for mechanical systems. The state of art is regular checkup and maintenance to ensure normal operations. This is not good enough for safety-critical systems like gearboxes in vehicles and helicopters because the risk of system failure still exists, let alone the manpower and monetary cost required. Prognostics and health management (PHM) was first raised by the U.S. armed force, which should ideally be able to predict faults and schedule maintenance only when necessary by monitoring the system condition. In this paper, inspired by the idea of Built-In Self Test (BIST) in electronic systems, we propose a novel framework to fulfill the task of prognostics and health management with a set of smart sensors, consisting of embedded sensing elements, wireless communication modules and micro-controllers. Both the significance and challenges of the framework are discussed.