Taking the decay heat removal system of a liquid-metal fast breeder reactor (LMFBR) as an example, a new reliability analysis method has been developed that can estimate how a failure occurring in a subsystem of a redundant system proliferates to another subsystem and how the independence of the redundant system is gradually lost. The Monte Carlo method is employed in the state transition representation. Environment changes evaluated from physical parameters, which correspond to failure time and to time- and sequence-dependent failure rates, are used to evaluate the stress-strength model. The failure rates derived are used to identify subsequent sequences. As a result of applying this technique to the decay heat removal operation of an LMFBR, a more realistic value of the unreliability has been obtained in a reasonable computation time, and the validity of this technique has been confirmed. The investigation of the interaction between the system and the pipe in the decay heat removal system has revealed that the influence is small under conditions set for this study.