Abstract: The fault detection problem was considered for a class of networked control systems with packet dropout subject to sensor saturation. The packet dropout was assumed to be exist in the sensor-to-controller link, and two independent Bernoulli distributed white sequences were used to describe the packet dropouts. A fault detection observer was designed to increase the fault sensitivity and attenuate the effects of disturbances. Based on linear matrix inequalities (LMIs) techniques, a sufficient condition was derived such that the robust fault detection system is uniformly bounded mean-square stable and satisfies the prescribed H∞ performance constraint. A numerical example was given to illustrate the effectiveness of the proposed method.