Function decomposition is an important step in the process of product design, in both original design and redesign. Following “Three-Flows Principle” complies with objective rules, and the result of product design proves its importance. For the many-to-many relationship between function and effect, when different effect is selected for a function, flows will be very different. The sustainability of product has close relation with the functions, principles, structure and material of product. In the process of function decomposition, designer should follow the sustainable design criteria for effects. Besides, it is significant to unearth available resources in function decomposition. A model of functional decomposition based on effect followed the sustainable design criteria and “Three-Flows Principle” is established in this article. Last, functional structure of heating equipment is established following both the new model and existing model. The results prove the superiority of the new model.