This thesis proposes a model-based systems engineering approach to ship design for the purpose of improving the Navys ship design processes. It links capability needs to the end solution by utilizing system architecture development based on capability requirements to allow for enhanced traceability, verification, and validation throughout the design process. Modeling tools are used to explore mission effectiveness against projected threats and create a design space for weighing tradeoffs early in the conceptual design phase. For demonstration of this approach, a simple design reference mission is created and a functional architecture is described. The capability of a potential design solution (assumed to have the physical architecture of a ship) is modeled to evaluate logical behavior and mission effectiveness. These models aid in the formation of physical design specifications, which are incorporated as inputs to a ship synthesis model. Several alternatives can be created for comparison that reveals the costs associated with various levels of capability giving decision-makers to ample information to consider.