This　paper　introduces　a　novel　approach　for　mechanical　manufacturing　system　to　implement　status　monitoring　and　fault　diagnosis.　The　embedded　hardware　and　software　framework　for　terminal　device　is　discussed　to　ensure　high　performance,　high　reliability,　high　expansibility,　low　power　and　small　volume.　According　to　the　demand　of　remote　status　monitoring,　the　strategy　of　data　transmission　and　information　sharing　is　applied　to　provide　the　analyzing　and　diagnosing　service　based　on　intranet/internet.　The　artificial　intelligent　technique　is　used　for　information　fusion　and　fault　diagnosis　of　manufacturing　system.　The　proposed　approach　shows　great　potential　for　improving　overall　production　efficiency,　while　reducing　the　cost　of　maintenance.