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Process monitoring and fault diagnosis of the continuous annealing process lines (CAPLs) have been a primary concern in industry. Stable operation of the line is essential to final product quality and continuous processing of the upstream and downstream materials. In this paper, a multilevel principal component analysis (MLPCA)-based fault diagnosis method is proposed to provide meaningful monitoring of the underlying process and help diagnose faults. First, multiblock consensus principal component analysis (CPCA) is extended to MLPCA to model the large scale continuous annealing process. Secondly, a decentralized fault diagnosis approach is designed based on the proposed MLPCA algorithm. Finally, experiment results on an industrial CAPL are obtained to demonstrate the effectiveness of the proposed method.