Fault diagnostics is an important research area including different techniques. Principal component analysis (PCA) is a linear technique which has been widely used. For nonlinear processes, however, the nonlinear principal component analysis (NLPCA) should be applied. In this work, NLPCA based on auto-associative neural network (AANN) was applied to model a chemical process using historical data. First, the residuals generated by the AANN were used for fault detection and then a reconstruction based approach called enhanced AANN (E-AANN) was presented to isolate and reconstruct the faulty sensor simultaneously. The proposed method was implemented on a continuous stirred tank heater (CSTH) and used to detect and isolate two types of faults (drift and offset) for a sensor. The results show that the proposed method can detect, isolate and reconstruct the occurred fault properly.