In this work the observations are made regarding the application of formal grammars in the product development process. Application of the formal grammars for the engineering problem solving is motivated by „Syntactic Structures” written by the American linguist and sociologist Noam Chomsky. Some basic definitions of the formal languages and grammar are stated in this work as well as the Chomsky’s hierarchy of formal languages and grammars. The first application of formal grammars for the product development purposes has been introduced by professors George Stiny and James Gips through shape grammar theory. Although the first implementations of the shape grammars have been predominantly for the architecture and civil engineering, soon the benefits have been recognized and the approach become widely accepted by other engineering branches. In this work a brief outlook of shape grammars, the theory behind them and some of the first successful examples of their application has been presented. Product grammar as a method can be applied in mechanical engineering. Building on the shape grammars examples, the basic definition of the product grammars has been revised and presented in an informal way. Basic idea about how to model a product on the component level using grammars has been adopted from the MIT work on product grammars intended for the automotive industry. Within this work a computer program “Gramatika Proizvoda” is developed as a tool for generation of grammar which is based upon product’s components. The definition of grammar is based upon the relationship between the product's function structure and available set of components that can realize these functions. After the user defines some of the most important elements of product grammar in the user interface, the program generates grammar automatically. Working with the computer program is further described on the real-life engineering example.