Segment-powered switch control sensor is an important component for the segmented linear motor control system. For the problems of fault diagnosis and location, an online fault diagnosis method of switch control sensor was proposed. Sensor signal data were compressed to improve computational efficiency; the law of switch control sensor signals changing with shuttle movement was studied, and a set of standard signals were defined; a calculating method for the sensor signal difference which is considered as a quantitative indicator of similarity analysis of signal was given; this problem was represented as the search problem of directed graph and the search was narrowed to a smaller area according to the characteristics of the problem; the search algorithm was given for estimating the process of system state transition according to the metrical data of sensor signals; the fault location process was proposed on the basis of the standard signal set，then the faults were located with the estimated results of the algorithm. Three propositions were given and proved to discuss the consistency between the algorithm and the expected result. The fault diagnosis method was validated through the fault data analysis of actual prototype.