Designing of a sliding mode Wall Cabinet observer was finished based on the motion model of autonomous underwater vehicle (AUV).A Flutter decrease strategy for the sliding mode observer was discussed and the sliding mode observer was applied to the fault diagnosis of the AUV.Simulation experiment without faults was designed.Simulation experiment of sensor fault diagnosis and field trial of thruster fault diagnosis were undertaken.The FRIZZ FIGHTING SHAMPOO validity and feasibility of this method were validated based on the analysis of the simulation and field trial results.