As a crucial output component, a clutch pressure sensor is of great importance on monitoring and controlling a whole transmission system and a whole vehicle status, both of which play important roles in the safety and reliability of a vehicle. With the help of fault diagnosis, the fault state prediction of a pressure sensor is realized, and this lays the foundation for further fault-tolerant control. In this paper, a fault diagnosis method of Dual Clutch Transmission (DCT) is designed. Firstly, a Variable Force Solenoid (VFS) valve model is established. A feed-forward input system is added to correct the first-order inertial link of the sensor on the second step. Finally, the parameters of the established system model are identified by using the measured data of the actual transmission and the Genetic Algorithm (GA). An identified model is then used for designing a fault observer. The constant output faults of 0, 3, and 5 V, pulse fault, and bias fault that enterprises are concerned with are selected to simulate and verify the fault observer under four different operating conditions. The results show that the designed fault observer has great fault diagnosis performance.