Abstract: With the increasing diversity of consumer market demand, the manufacturing industry is shifting from a single-variety and large-batch production mode to a multi-variety and small-batch one. Complex production systems like assembly systems are widely adopted to meet the market demand for diversified products.This paper conducts a transient performance analysis for assembly systems considering unreliable machines and limited buffers under a multi-type, small-batch production mode. First, based on the establishment of a standard mathematical model, we derive the exact expression of transient performance indicators using Markov analysis method. Then, to solve the state space explosion problem, a series of auxiliary production lines is introduced, and an efficient approximation method based on dynamic aggregation is proposed. Finally, the accuracy and effectiveness of the proposed approximation algorithm are validated through simulation-based comparison experiments.