We analyse the construction as well as the role of ontologies in knowledge sharing and reuse for complex industrial applications. In this article, the practical use of ontologies in large-scale applications not restricted to knowledge-based systems is demonstrated, for the domain of engineering systems modelling, simulation and design. A general and formal ontology, called PHYSSYS, for dynamic physical systems is presented and its structuring principles are discussed. We show how the PHYSSYS ontology provides the foundation for the conceptual database schema of a library of reusable engineering model components, covering a variety of disciplines such as mechatronics and thermodynamics, and we describe a full-scale numerical simulation experiment on this basis pertaining to an existing large hospital heating installation. From the application scenario, several general guidelines and experiences emerge. It is possible to identify variousviewpointsthat are seen as natural within a large domain: broad and stable conceptual distinctions that give rise to a categorization of concepts and properties. This provides a first mechanism to break up ontologies into smaller pieces with strong internal coherence but relatively loose coupling, thus reducing ontological commitments. Secondly, we show how general and abstract ontologicalsuper theories,for example mereology, topology, graph theory and systems theory, can be used and reused as generic building blocks in ontology construction. We believe that this is an important element in knowledge sharing across domains. Thirdly, we introduceontology projectionsas a flexible means to connect different base ontologies. Ontology projections can occur in simple forms such as include-and-extent and include-and-specialize, but are in their richest form very knowledge-intensive, being in fact themselves full-blown ontological theories.