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This paper investigates the leakage fault diagnosis problem for a physical Internet-based three-tank system (ITTS). Data from different devices locating at different places communicate with each other via Internet and, due to the limited bandwidth of communication channel, data suffer from delay and/or dropout phenomenon during the transmission. The resulting incomplete signals are utilized for the control and diagnosis purpose, giving rise to a networked control system (NCS). After linearization and discretization of the mathematical model of the three-tank system (TTS), the original nonlinear fault diagnosis problem is converted into a robust leakage fault detection and isolation problem for a linear system with uncertain parameters. The detection problem is then solved by using the robust H_ filter technique and the leakage faults of different tanks are isolated by using the idea of residual contributing degree (RCD). Experimental results are provided to show the effectiveness and applicability of the proposed techniques.