On　analyzing　the　features　of　applying　gray　relation　to　fault　diagnosis,　a　gray　relation　principle　was　applied　to　identify　diamond-pen　blunt　level　on　the　dressing　process　of　grinding　wheel.　Through　experiments,　the　dressing　depth,　the　feed　rate　and　RMS　were　selected　as　the　characteristic　parameters,　and　considering　effective　degree　of　the　characteristic　parameters,　the　data　processing　method　for　initial　value　was　selected　so　as　to　enhance　the　accuracy.　It　was　proved　by　experiments　that　the　grey　relation　method　is　appropriate　to　identify　diamond-pen　blunt　level.