This paper presents a degradation modeling framework for computing condition-based residual life distributions of partially degraded systems and/or components functioning under time-varying environmental and/or operational conditions. Our approach is to mathematically model degradation-based signals from a population of components using stochastic models that combine three main sources of information: real-time degradation characteristics of component obtained by observing the component's in-situ degradation signal, the degradation characteristics of the component's population, and the real-time status of the environmental conditions under which the component is operating. Prior degradation information is used to estimate the model coefficients. The resulting generalized stochastic degradation model is then used to predict an initial residual life distribution for the component being monitored. In-situ degradation signals, along with real-time information related to the environmental conditions, are then used to update the residual life distributions in real-time. Because these updated distributions capture current health information and the latest environmental conditions, they provide precise lifetime estimates. The performance of the proposed models is evaluated using real world vibration-based degradation signals from a rotating machinery application.