Abstract: Facing to the remote monitoring systems with delayed controls and measurements in facility agriculture, the problems of fault diagnosis and fault-tolerant control were investigated. The optimal fault-tolerant control law for faulty systems was designed, and the uniqueness of the optimal fault-tolerant control law was proved. In order to diagnose faults and to solve the physically unrealizable problems of the optimal fault-tolerant control law, a delay-free transformation approach was given for delayed measurements. The on-line fault diagnosis and the observation of system states were realized by constructing the reduced-order state observer for the augmented system comprising fault states. Finally, the physically realizable dynamic optimal fault-tolerant control law was obtained by utilizing the results of fault diagnosis. Simulation results demonstrate the validity of both the fault diagnosis scheme and the dynamic optimal fault-tolerant control law.