A unified fault detection and isolation (FDI) and fault tolerant control (FTC) strategy for the diesel engine's air management system has been formulated. Diesel engines need to comply with the strict emission requirements for which they are equipped with specialized sub-systems for the purpose, such as the variable geometry turbo (VGT) charger and exhaust gas recirculation (EGR). Hardware-based controls tend to make the system more complex and prone to structured and unstructured faults. This calls for an advanced FTC technique that can ensure desired level of emissions even in the presence of minor system malfunctions. The scheme proposed in this paper detects, isolates and estimates the structured faults and minimizes their effects by re-positioning the actuators using integral sliding mode (ISM) control. Estimating the magnitude of structured faults help to reduce the ISM controller gains, eventually reducing the chattering. The stability of the system is analyzed using Lyapunov stability criterion. Simulations have been performed using fully validated industrial scale model of a diesel engine to elucidate the effectiveness of our scheme.