Vibration has traditionally been associated with trouble in machines-wear, malfunction, noise, and structural damage. In more recent years however, vibration has been used to save industry million of dollars in machine downtime. Evaluation of change in level of machine vibration has become an important part of most maintained programs. Similar evaluation is used to solve design problems as well as to establish the cause of chronic malfunctions and failures. Faults and failures of machines can lead to excessive down times and generate large losses in terms of maintenance and lost revenues, and this motivates the examination of vibrations signal. Online Vibration Signal Monitoring System is used for taking measurements of vibrations build up at the various parts of machine during its operation to send an alarm before it develop the major failures due to load variations, supply/frequency fluctuations, insulation breakdowns, mechanical /electrical wears etc. The project work aims to provide a broad review of the state of the art in fault diagnosis techniques, with particular regard to electric and hydraulic machinery.