Aiming at the problem of fault diagnosis in continuous time systems, a kind of fault diagnosis algorithm based on adaptive nonlinear proportional integral (PI) observer, which can realize the effective fault identification, is studied in this paper. Firstly, the stability and stability conditions of fault diagnosis method based on the PI observer are analyzed, and the upper bound of the fault estimation error is given. Secondly, the fault diagnosis algorithm based on adjustable nonlinear PI observer is designed and constructed, it is analyzed and we proved that the upper bound of fault estimation under this algorithm is better than that of the traditional method. Finally, the L-1011 unmanned aerial vehicle (UAV) is taken as the experimental object for numerical simulation, and the fault diagnosis method based on adaptive observer factor achieves faster response speed and more accurate fault identification results.