A methodology is proposed for the online detection of health status of rolling element bearing into various damage stages for naturally progressing defect. Various damage identification parameters are derived from processing vibration data in time domain, frequency domain and time–frequency domain. The parameters are fused into a single parameter, Mahalanobis distance, by application of Gram–Schmidt Orthogonalization process. Chebyshev׳s inequality is applied to the Mahalanobis distance for online monitoring and damage stage detection. A simulation study is first carried out to show working of the proposed methodology in presence of varying trends of damage identification parameters. The proposed methodology is then validated on experimental data. The first validation is on the vibration data acquired from a bearing having seeded defect. Later, two accelerated life tests are conducted on a specially designed test rig at different load and speed combinations on the bearings for ensuring naturally induced and progressed defects. The methodology is successfully verified on the vibration data acquired from the naturally induced and progressed defect experiments.