To ensure the system run under working order, detection and diagnosis of faults play an important role in industrial process. This paper proposed a nonlinear fault diagnosis method based on kernel principal component analysis (KPCA). In proposed method, using essential information of nonlinear system extracted by KPCA, we constructed KPCA model of nonlinear system under normal working condition. Then new data were projected onto the KPCA model. When new data are incompatible with the KPCA model, it can be concluded that the nonlinear system isout of normal working condition. Proposed method was applied to fault diagnosison rolling bearings. Simulation results show proposed method provides an effective method for fault detection and diagnosis of nonlinear system.