One of the important advantages of multichannel switches is the incorporation of inherent fault tolerance into the switching fabric. For example, if a link which belongs to the multichannel group fails, the remaining links can assume responsibility for some of the traffic on the failed link. On the other hand, if faults occur in the switching elements, it can lead to erroneous routing and sequencing in the multichannel switch. We investigate several fault localization algorithms in multichannel crossbar ATM switches with a view to early fault recovery, The optimal algorithm gives the best performance in terms of time to localization but is computationally complex which makes it difficult to implement. We develop an on-line algorithm which is computationally mote efficient than the optimal algorithm. We evaluate its performance through simulation. The simulation results show that performance of the on line algorithm is only slightly sub-optimal for both random and bursty traffic. Finally a fault recovery algorithm is described which utilizes the information provided by the fault localization algorithm.