PCA(Principle Component Analysis) has emerged as a useful tool for process monitoring and fault diagnosis. The general approach requires the user to identify the root cause by interpreting the residual or principle components. This could be tedious and often impossible for a large process. In this paper, PCA scheme is combined with the FCM-based fault diagnostic algorithm to enhance the diagnostic results. The implementation of the FCM-based fault diagnostic system by using PCA is done and its application is illustrated on the two-tank system.