Bearing is a key component of satellite inertia actuators such as moment wheel assemblies (MWAs) and control moment gyros (CMGs), and its operating state is directly related to the performance and service life of satellites. However, because of the complexity of the vibration frequency components of satellite bearing assemblies and the small loading, normal running bearings normally present similar fault characteristics in long-term ground life experiments, which makes it difficult to judge the bearing fault status. This paper proposes an automatic fault diagnosis method for bearings based on a presented indicator called the characteristic frequency ratio. First, the vibration signals of various MWAs were picked up by the bearing vibration test. Then, the improved ensemble empirical mode decomposition (EEMD) method was introduced to demodulate the envelope of the bearing signals, and the fault characteristic frequencies of the vibration signals were acquired. Based on this, the characteristic frequency ratio for fault identification was defined, and a method for determining the threshold of fault judgment was further proposed. Finally, an automatic diagnosis process was proposed and verified by using different bearing fault data. The results show that the presented method is feasible and effective for automatic monitoring and diagnosis of bearing faults.