The advancement of renewable energy technology has been significantly aided by solar photovoltaics (PV). Since solar PV is a weather‐dependent source, it cannot be dispatched. To ensure that the solar PV system can harvest the maximum amount of electricity for the available irradiance level, maximum power point tracking (MPPT) algorithms are used. For standalone low‐voltage DC (LVDC) microgrids to utilize the energy storage system as efficiently as possible, maximum power extraction is essential. The sensed PV voltage and current are essential for these MPPT algorithms to ensure that the maximum power point of the panel is captured. This work proposes an effective fault‐tolerant control (FTC) scheme for the solar PV subsystem in the LVDC microgrid that can seamlessly extract the maximum power despite the PV voltage sensor being faulty. The proposed FTC scheme uses a sliding mode observer (SMO)‐based method to detect and isolate PV voltage sensor faults in the standalone LVDC microgrid. The efficacy of the proposed FTC is assessed in a range of circumstances involving load disturbance, irradiance change, and various sensor fault scenarios. The performance of the proposed FTC is validated using experimental analysis on the LVDC microgrid testbed and MATLAB simulations. Given a faulty PV voltage sensor, at a given operating condition of the microgrid, the proposed FTC scheme is successful in reducing the additional power burden on the battery storage by at least two times. Consequently, the additional discharge in terms of SoC is also seen to be decreased by at least 9%. The proposed FTC technique outperforms the popular MPPT approaches for solar PV in terms of PV voltage sensor fault tolerance in the microgrid.