ln this paper, we present a hidden Markov model (HMM) based algorithm for f
ault diagnosis in systems with partial and imperfect tests. The HMM-based a
lgorithm Ends the most likely state evolution, given a sequence of uncertai
n test outcomes over time. We also present a method to estimate online the
HMM parameters, namely, the state transition probabilities, the instantaneo
us probabilities of test outcomes given the system state and the initial st
ate distribution, that are fundamental to HMM-based adaptive fault diagnosi
s, The efficacy of parameter estimation method is demonstrated by comparing
the diagnostic accuracies of an algorithm with complete knowledge of HMM p
arameters with those of an adaptive one. In addition, the advantages of usi
ng the HMM approach over a Hamming-distance based fault diagnosis technique
are quantified. Tradeoffs in computational complexity versus performance o
f the diagnostic algorithm are also discussed.