For a structural health monitoring (SHM) system, the operational functionality of sensors is critical for successful implementation of a damage identification process. This study presents experimental and analytical investigations on sensor fault diagnosis for impedance-based SHM using the piezoelectric interface technique. Firstly, the piezoelectric interface-based impedance monitoring is experimentally conducted on a steel bolted connection to investigate the effect of structural damage and sensor defect on electromechanical (EM) impedance responses. Based on the experimental analysis, sensor diagnostic approaches using EM impedance features are designed to distinguish the sensor defect from the structural damage. Next, a novel impedance model of the piezoelectric interface-driven system is proposed for the analytical investigation of sensor fault diagnosis. Various parameters are introduced into the EM impedance formulation to model the effect of shear-lag phenomenon, sensor breakage, sensor debonding, and structural damage. Finally, the proposed impedance model is used to analytically estimate the change in EM impedance responses induced by the structural damage and the sensor defect. The analytical results are found to be consistent with experimental observations, thus evidencing the feasibility of the novel impedance model for sensor diagnosis and structural integrity assessment. The study is expected to provide theoretical and experimental foundations for impedance monitoring practices, using the piezoelectric interface technique, with the existence of sensor faults.