This paper presents a fault diagnosis method using neural network-based multi-fault models and statistical method to detect and isolate faults in nonlinear systems. In the proposed method, faults are detected when the errors between the system output and the neural network nominal system output cross a predetermined threshold. Once a fault in the system is detected, the fault classifier statistically isolates the fault by using the error between each neural network-based fault model output and the system output. From the computer simulation results, it is verified that the proposed fault diagonal method can be performed successfully to detect and isolate faults in a nonlinear system.