Two primary parameters stand out for characterizing fuel cell system performance. The first and most important parameter is system efficiency. This parameter is relatively easy to define, and protocols for its assessment are already available. Another important parameter yet to be fully considered is system degradation. Degradation is important because customers desire to know how long their purchased fuel cell unit will last. The measure of degradation describes this performance factor by quantifying, for example, how the efficiency of the unit degrades over time. While both efficiency and degradation concepts are readily understood, the coupling between these two parameters must also be understood so that proper testing and evaluation of fuel cell systems is achieved. Tests not properly performed, and results not properly understood, may result in improper use of the evaluation data, producing improper R&D planning decisions and financial investments. This paper presents an analysis of system degradation, recommends an approach to its measurement, and shows how these two parameters are related and how one can be "traded-off" for the other. (c) 2005 Elsevier B.V. All rights reserved.