Abstract The fault propagation of multistate systems (MSSs) with various operational modes is a critical factor affecting the reliability and safety of systems. However, traditional methods have difficulty describing the influence of function transitions and multiple faults of components on fault propagation, and are inapplicable for accurately evaluating the dynamic reliability of MSSs. To solve these issues, an agent-based method is developed to evaluate the dynamic reliability of MSSs. This study proposes a reliability modeling framework that consists of a management agent and several system agents. Combined with different agents, two types of models are established to describe the logical relationships among components. Moreover, Monte Carlo simulation is used to evaluate the dynamic reliability of MSSs, and a visual failure paths analysis method is proposed to inhibit potential risk. The LH4-1 horizontal Christmas tree is used to verify the effectiveness of proposed method. Under the designed working condition, the dynamic reliability curve of system with three operational modes and the visual failure paths including 15-node are obtained. By comparing the influence of failure rates, it is found that the production choke valve, flowlines, tree cap and MEG chemical control valve have a great impact on the system reliability.