In this paper, a novel adaptive fault-tolerant controller is proposed for a typical electrohydraulic rotary actuator in the presence of disturbances, internal leakage fault, and sensor fault simultaneously. To construct the suggested controller, a nonlinear unknown input observer is developed to effectively identify the sensor fault, which is unaffected by not only internal leakage fault but also mismatched disturbances/uncertainties. Furthermore, a radial basis function neural network is designed to compensate for the mismatched disturbances/uncertainties caused by payload variation and unknown friction nonlinearities. Besides, an adaptive law based on the projection mapping function is applied to tackle the effect of the internal leakage fault. The integration of the above-mentioned techniques into the adaptive backstepping terminal sliding mode is investigated to obtain high tracking performance, robustness as well as fast convergence. The stability of the closed-loop system is proven by the Lyapunov theory. Finally, the capability and effectiveness of the proposed approach are validated via simulation results under various faulty scenarios.