The present invention provides a method and system for stage evaluation of a state machine model. Two types of transitions are used: first-stage transitions and second-stage transitions for a two-stage evaluation. In one embodiment, top-down processing and bottom-up processing may be combined using a two-stage evaluation. First-stage transitions are used with top-down processing while second-stage transitions are used with bottom-up processing. Certain conditions are used to determine if a switch from one type of stage processing to another type of stage processing is needed.