The vibration in rotating machinery is mostly caused by unbalance, misalignment, mechanical looseness, shaft crack and other malfunctions. Inspite of its importance and frequent observations in practice, only a few researchers have paid attention to misalignment. In the present study a model based method is proposed for the on-line identification of coupling misalignment in a rotor-coupling-bearing system. The fault-induced change of the rotor system is taken into account by equivalent loads in the mathematical model. The equivalent loads are virtual forces and moments acting on the linear undamaged system to generate a dynamic behaviour identical to the measured one of the damaged system. The rotor system, including flexible coupling has been modelled using finite element method (FEM). The reaction forces and moments due to misalignment have been estimated and are applied at the coupling nodes. Systematic fault identification is done with model-based approach. The nature and symptoms of the fault that is coupling misalignment are ascertained using the FFT. Copyright © 2003 by DEStech Publications, Inc. All right reserved.