In model-based fault diagnosis for dynamic systems with uncertain parameters, an envelope of all fault-free behaviors can be determined from the model and used as reference for detecting faults. We demonstrate here a method for generating all envelope that is rigorously guaranteed to be complete, but without significant overestimation. The method is based on all interval approach, but uses Taylor models to reduce the overestimation often associated with interval methods. To speed fault detection, a method that uses bounded-error measurement data and a constraint propagation procedure is proposed for shrinking the envelope. Several fault detection scenarios involving nonlinear, continuous-time systems are used to evaluate this approach. (C) 2009 American Institute of Chemical Engineers.