Using condition-based maintenance (CBM) to assess machinery health is a popular technique in many industries, especially those using rotating machines. CBM is relevant in environments where the prediction of a failure and the prevention and mitigation of its consequences increase both profit and safety. Prognosis is the most critical part of this process and the estimation of Remaining Useful Life (RUL) is essential once failure is identified. This paper presents a method of synthetic data generation for hybrid model-based prognosis. In this approach, physical and data-driven models are combined to relate process features to damage accumulation in time-varying service equipment. It uses parametric models and observer-based approaches to Fault Detection and Identification (FDI). A nominal set of parameters is chosen for the simulated system, and a sensitivity analysis is performed using a general-purpose simulation package. Synthetic data sets are then generated to compensate for information missing in the acquired data sets. Information fusion techniques areproposed to merge real and synthetic data to create training data sets which reproduce all identified failure modes, even those that do not occur in the asset, such as Reliability Centered Maintenance (RCM), Failure Mode and Effect Analysis(FMEA). This new technology can lead to better prediction of remaining useful life of rotating machinery and minimizing and mitigating the costly effects of unplanned maintenance actions.