For multiple faults of mechanical transmission systems, a method of fault identification and localization for a speed reducer is presented. Modal anal ysis of the speed reducer was made according to the characteristics of the reduc er’soperating faults and the generalized modal shape in the fault frequency was obtained. Faults of the reducer were identified and localized. The method brea ks through the conventional static testing and diagnosis and provides a new way for condition monitoring and fault diagnosis of equipment under working conditio ns.