In this paper, we present a new effective algorithm for element failure compensation of Generalized Sidelobe Canceller (GSC). While the GSC is well formulated, little works have been done on array element compensation in the presence of faulty elements. Element failure changes the problem of a linearly equally spaced array into that of an unequally spaced array. Typical research approaches have been directed at using search techniques to optimize unequally spaced arrays. The proposed algorithm matches the linear constraint conditions and the general shape of the desired beam pattern at the expense of an increase of beam-width in the overall main lobe. Numerical results are included to demonstrate the capability of compensation for various situations.