A new model-based sensor fault diagnosis (FD) scheme, using an equivalent model, is developed for a kind of Multiple Inputs Multiple Outputs (MIMO) nonlinear system which fulfills the Lipschitz condition. The equivalent model, which is a bank of one-dimensional linear state equations with the bounded model uncertainty, can take the place of a plant's exact nonlinear model in the case of sensor FD. This scheme shows a new perspective whereby, by using the equivalent model, it doesn't have to study the nonlinear internal structure character or get the exact model. The influence of the model uncertainty on the residuals is explained in this paper. A method, called pretreatment, is utilized to minimize the model uncertainty. The eigenstructure assignment method with assistant state is employed to solve the problem of perfect decoupling against the model uncertainty, disturbance, system faults, the relevant actuator faults, or even the case of no input from the relevant actuator. The realization of the proposed scheme is given by an algorithm according to a single sensor FD, and verified by a simulation example. Depending on the above, a sensor fault monitoring system is established by the sensor network and diagnosis logic, then the effectiveness is testified by a simulation.