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The performance of fuzzy neural networks applied to sensor monitoring strongly depends on the selection of input signals. A large number of input signals may be involved to estimate an output signal for failure detection. However, as the number of input signals increases, the required training time increases exponentially and the uncertainty of the model increases significantly due to the irrelevant and/or the redundant inputs. In this paper, a fuzzy neural network with an optimal structure constructor has been successfully developed to achieve a reliable and efficient sensor monitoring system. A fuzzy neural network is used to estimate an output signal from the selected input signals. Correlation analysis and genetic algorithm (GA) are combined for automatic input selection. In addition, the optimal number of fuzzy rules is accomplished automatically by the GA integrated along with the automatic input selection. The status of sensor health is determined by applying sequential probability ratio test to the residuals between the measured signals and the estimated signals. The proposed sensor monitoring system has been validated by using a variety of sensor signals acquired from Yonggwang units 3 and 4 pressurized water reactors.