This study focuses on two specific problems of knowledge intensive computer aided design: (a) how can design concepts be modeled and represented in a form that is understandable for human beings and can be processed by computers, (b) how can they be arranged in structures that enables a computer-based functional design of products. First, a methodology for definition of very high level modeling entities based on the ontology theory is presented. It formalizes design concepts in terms of all concerned entities, phenomena and situations and describes them by attributes, parameters and descriptors, respectively. Validity and interactions of design concepts are governed by constraints. The very high level modeling entities are arranged into domain oriented design ontologies based on their contents and semantic relationships. The formalism used for logical specification of design ontologies is based on a library of declarative expressions called ACN-Code. A design ontology lends itself to a specific knowledge base called associative concept network (ACN). The inference engine that works on an application oriented ACN selects the appropriate design concepts against a set of user specified functional requirements. Due to the pre-defined associations incomplete functional specifications can be completed to result in a fully functional design solution. The paper also presents an application example.