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This paper presents a novel methodology for fault diagnosis in gas turbine engines based on the concept of dynamic neural networks. The neural network structure belongs to the class of locally recurrent globally feed-forward networks. The architecture of the network is similar to the feed-forward multi-layer perceptron with the difference that the processing units include dynamic characteristics. The dynamic neural network is used for fault detection in a dual-spool turbo fan engine. A number of simulation studies are conducted to demonstrate the advantages of our proposed neural network diagnosis methodology.