In regard to the effectiveness of types of knowledge on fault diagnosis performance, many experimental studies showed that training with procedural knowledge (diagnostic rules) is very effective to enhance diagnosis performance. But the effects of training with principle knowledge (theoretical knowledge) have been controversial. Some studies went so far as to claim that principle knowledge is not useful for diagnosis. However, common experience suggests that understanding the principles of system dynamics is valuable in certain diagnostic situations. In this study, we conducted an experiment to investigate the value of principle knowledge in various fault situations. A context-free digital logic circuit including 41 gates of three basic types was simulated for the subjects to diagnose. The experimental results showed that instructing principle knowledge has positive effects that are dependent on the complexity of diagnostic problems. The observations also provide insights on how fault diagnosis benefits from principle knowledge. (c) 2007 Wiley Periodicals, Inc.