This article aims to incorporate the reliability model of power electronic converters into power system reliability analysis. The converter reliability has widely been explored in device- and converter-levels according to physics of failure analysis. However, optimal decision-making for design, planning, operation, and maintenance of power electronic converters require system-level reliability modeling of power electronic-based power systems. Therefore, this article proposes a procedure to evaluate the reliability of power electronic-based power systems from the device-level up to the system-level. Furthermore, the impact of converter failure rates including random chance and wear-out failures on power system performance in different applications such as wind turbine and electronic transmission lines is illustrated. Moreover, because of a high calculation burden raised by the physics of failure analysis for large-scale power electronic systems, this article explores the required accuracy for reliability modeling of converters in different applications. Numerical case studies are provided employing modified versions of the Roy Billinton Test System (RBTS). The analysis shows that the converter failures may affect the overall system performance depending on its application. Therefore, an accurate converter reliability model is, in some cases, required for reliability assessment and management in modern power systems.