In this paper, a novel photovoltaic (PV) bypass diode fault detection algorithm is presented. The algorithm consists of three main steps. First, the threshold voltage of the I-V curve is obtained using different failure bypass diode scenarios. Second, the theoretical prediction for the faulty regions of bypass diodes is calculated using the analysis of voltage drop in the I-V curve as well as the voltage at maximum power point. Lastly, the actual I-V curve under any environmental condition is measured and compared with theoretical predictions. The proposed algorithm has been experimentally evaluated using a PV string that comprises three series-connected PV modules, and subtotal nine bypass diodes. Various experiments have been conducted under diverse bypass diodes failure conditions. The achieved detection accuracy is always greater than 99.39% and 99.74% under slow and fast solar irradiance transition respectively.