In recent years, electro-hydraulic systems have been widely used in many industries and have attracted research attention because of their outstanding characteristics such as power, accuracy, efficiency, and ease of maintenance. However, such systems face serious problems caused simultaneously by disturbances, internal leakage fault, sensor fault, and dynamic uncertain equation components, which make the system unstable and unsafe. Therefore, in this paper, we focus on the estimation of system fault and uncertainties with the aid of advanced fault compensation techniques. First, we design a sliding mode observer using the Lyapunov algorithm to estimate actuator faults that produce not only internal leakage fault but also disturbances or unknown input uncertainties. These faults occur under the effect of payload variations and unknown friction nonlinearities. Second, Lyapunov analysis-based unknown input observer model is designed to estimate sensor faults arising from sensor noises and faults. Third, to minimize the estimated faults, a combination of actuator and sensor compensation fault is proposed, in which the compensation process is performed due to the difference between the output signal and its estimation. Finally, the numerical simulations are performed to demonstrate the effectiveness of the proposed method obtained under various faulty scenarios. The simulation results show that the efficiency of the proposed solution is better than the traditional PID controller and the sensor fault compensation method, despite the influence of noises.