A knowledge-based system (KBS) was designed for automated system identification, process monitoring, and diagnosis of sensor faults. The real-time KBS consists of a supervisory system using G2 KBS development software linked with external statistical modules for system identification and sensor fault diagnosis. The various statistical techniques were prototyped in MATLAB, converted to ANSI C code, and linked with the G2 Standard Interface. The KBS automatically performs all operations of data collection, identification, monitoring, and sensor fault diagnosis with little or no input from the user. Navigation throughout the KBS is via menu buttons on each user-accessible screen. Selected process variables are displayed on charts showing the history of the variables over a period of time. Multivariate statistical tests and contribution plots are also shown graphically. The KBS was evaluated using simulation studies with a polymerization reactor through a nonlinear dynamic model. Both normal operation conditions as well as conditions of process disturbances were observed to evaluate the KBS performance. Specific user-defined disturbances were added to the simulation, and the KBS correctly diagnosed both process and sensor faults when present.