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This work demonstrates the feasibility of reliability modeling of systems with repair capability using a semi-Markov process. A two-unit system with exponential failure times but general repair times is studied. Formulas for state-transition probabilities, waiting-time distribution functions, and mean time in each state are developed. These quantities are expressed in terms of the Laplace transform of repair time distribution functions. Once these quantities are known, mean time to system failure and system availability, as well as other system parameters, can be found using matrix manipulations. In addition, time-dependent results may be obtained. A numerical example varying the parameter in a repair-time law is presented. The formulas developed can be extended to larger systems with repair capability for only one unit at a time and exponential failure times.