FAA regulations require the monitoring of all commercial aircraft engines to ensure airworthiness. In doing so, it provides economic advantages to engine owners to monitor engine performance and resolve identified issues in a timely manner to reduce operational costs or avoid secondary damage. Various remote monitoring and diagnostics service providers exist in the marketplace. However, a common understanding among most of them is that given limited time and information, it is an extremely difficult task to make quick and optimized decisions. Difficulties arise from the fact that an aircraft engine is a complex system and demands considerable expertise to diagnose, but also due to the uncertainty in estimating an engine’s true physical state because of measurement and process noise. Therefore, it is often difficult to decide what action to take in order to achieve the most desirable outcome. In this paper, a cost sensitive engine diagnostic and decision making methodology is described. Diagnostic tool performance at various decision thresholds is estimated over a large set of validated historical cases to evaluate sensitivity, specificity and other quality indices. These quality indices and a set of cost functions are utilized in influence diagrams to derive the optimized decision model in order to minimize costs given the uncertain engine condition and noisy parametric data.