Smart transmitters are increasingly being deployed in safety critical systems. Although the processing and diagnostic features provided by digital systems are advantageous, it introduces additional complexity in reliabilitymodelling of systems. The conventional Fault Tree Analysis (FTA) method for system reliability analysis has its shortcomings in modelling digital systems, to incorporate its dynamic system interaction and failure modes in detail. This is because some of the failure modes may arise due to the dynamic interactions between the modules of the system. Dynamic Flowgraph Methodology (DFM) was identified as one of the optimistic approaches to handle these interactions. DFM approach combines multi-valued logic modelling and analysis capabilities to handle systems consisting of components that have multiple degraded states and exhibit dynamic behaviour. However, only few DFM tools have been developed and some of them are not available in public domain. The DFM approach relies heavily on development and implementation of its decision tables. The logic information present within the decision tables can bemeticulously implemented using Petri Nets. Also, there are plenty of free Petri Nets tools available online. Thus, the idea of DFM was used in this work to capture the dynamic interactions by developing decision tables. The decision tables were transformed into the Petri Net models to perform the analysis. The paper demonstrates the potential of the hybrid DFM – Petri Net approach for dynamic reliability analysis of smart transmitter.