This paper proposes a novel improved LLE-based (local linear embedding) approach (TLLE) for solving the fault diagnosis problem of the nonlinear system. Firstly, tangent space distance is introduced to LLE approach, which can satisfy the local linearity of LLE and better preserve the local manifold features of the original data simultaneously. Then, to solve the problem of inner dimension in LLE approach is hard to estimate, the method of intrinsic dimension estimation based on fractal dimension is employed in the approach by means of linear fitting. Furthermore, a fault diagnosis scheme is presented based on the TLLE approach. We combine fault state with special distribution to complete the fault diagnosis, which can simplify the computation obviously and improve the real-time capability of the approach. Finally, numerical simulations of the TE process data are performed to illustrate the effectiveness of the proposed fault diagnosis scheme.