Balancing machine is a general equipment for dynamic balance verification of rotating parts, whether it breaks down or does not determine the accuracy of dynamic balance verification. In order to solve the problem of insufficient fault diagnosis accuracy of balancing machine, a fault diagnosis method of balancing machine based on the Improved Sparrow Search Algorithm (ISSA) optimized Extreme Learning Machine (ELM) was proposed. Firstly, iterative chaos mapping and Fuch chaos mapping were introduced to initialize the population and increase the population diversity. Secondly, the adaptive dynamic factor and Levy flight strategy were also introduced to update the individual positions and improve the model convergence speed. Finally, the fault feature vector was input to the ISSA-ELM model with the fault type as the output. The experiment showed that the fault diagnosis accuracy of ISSA-ELM is as high as 99.17%, which is 1.67%, 2.50%, 7.50%, and 17.50% higher than that of SSA-ELM, HHO-ELM, PSO-ELM, and ELM, respectively, further improving the prediction accuracy of the operation state of the balancing machine.