Observers have been used for more than 30 years as popular techniques to replace sensors for high performances electrical drives. On the other hand, condition monitoring and fault detection of electrical drives have been based on data analysis coming from sensor measurements. It was a natural trend to mix together the two different techniques to investigate the possibility of replacing sensors by observers to achieve efficient electrical and mechanical fault detection. This paper is intended to review the state of the art of electrical and mechanical fault detection by using torque observers. For the purpose two main parts have been developed. The first one is related to the basic torque observers and their performances. The second one has been based on the usage of torque observation to perform an efficient fault detection for high performance electrical drives. This contribution is more based on the different scheme analysis rather than on performances in term of data processing.