This paper proposes an unsupervised method for diagnosing and monitoring defects in inductive thermography imaging system. The proposed method is fully automated and does not require manual selection from the user of the specific thermal frame images for defect diagnosis. The core of the method is a hybrid of physics-based inductive thermal mechanism with signal processing-based pattern extraction algorithm using sparse greedy based Principal Component Analysis (SGPCA). An internal functionality is built into the proposed algorithm to control the sparsity of SGPCA. and to render better accuracy in sizing the defects. The proposed method is demonstrated on automatically diagnosing the defects on metals and the accuracy of sizing the defects. Experimental tests and comparisons with other methods have been conducted to verify the efficacy of the proposed method. Very promising results have been obtained where the performance of the proposed method is very near to human perception. Index Terms-Data analytics for diagnosis and monitoring, instrumentation, inductive thermal imaging, machine intelligence, non-destructive testing and evaluation. I. INTRODUCTION maging diagnostic system for defect detection is highly demanded in industry [1, 2]. This has been applied on inspection of electronic chips or dies in semiconductor production lines [3]. Acciani et al. extracted the features of the regions of interest in test images and then built multilayer neural networks for defect detection [4] on solder joints in surface mount technology of industry. Tsai et al. proposed defect inspection system of solar modules in electroluminescence (EL) images [5]. A. Picon et al. proposed fuzzy spectral and spatial feature integration method for classification of nonferrous materials in hyperspectral data [6]. All these methods recognize that image based defect diagnostic system is a wide group of analysis technique used in science and industry to evaluate the properties of material, component or system without causing damage [7-9]. Infrared thermography systems have reached a prominent status as a nondestructive testing and evaluation Manuscript received on