In the highly cluttered undersea environment, sonar array systems require enhanced acoustic signal processing algorithms and sophisticated architectures in order to meet dependability and real-time mission requirements. The probability of hydrophone and processing element failures is very high in such severe operating environments. Adaptive matched-field processing (MFP) algorithms localize sources accurately with moderate levels of signal-to-noise ratio (SNR) and precise knowledge about environments by employing full-wave acoustic propagation models. However, they highly distort output beam patterns with significant increase of sidelobes in the presence of environmental mismatches and element failures. These problems make the development of advanced fault-tolerant signal processing algorithms imperative to tolerate the element failures in cases where replacement of defective elements is impossible or impractical. In this paper, three fault-tolerant MFP algorithms are presented to compensate for the performance degradation generated by the inherent failure characteristics of vertical line arrays. The beamforming performance and computational complexities for these fault-tolerant algorithms are analyzed in terms of the number of faulty elements, their positions in the array, and SNRs. The simulation results demonstrate that these fault-tolerant techniques provide a feasible solution for real-time and highly reliable beamforming implementation on sonar array systems.