In this paper, the problem of fault detection is investigated for networked control systems with signal quantization and random packet dropouts. In the study, the packet dropouts are modeled by a time-homogeneous Markov process. A residual generator is constructed, and the corresponding fault detection problem is converted into an H∞ filtering problem. A sufficient condition for the design of fault detection is derived, which makes the resulting residual system to be stochastically stable with a prescribed H∞ performance level. Finally, a numerical example is given to illustrate the effectiveness and efficiency of the proposed design method.