This paper proposes a gyro and star sensor fault diagnosis architecture that designs two groups of cascade H∞ optimal fault observers using LMI for spacecraft attitude control systems and schemes a Compensation PD controller to achieve fault tolerant control. The basic idea of the approach is to identify the gyro fault to good effect first and then makes a further diagnosis for the star sensor based on the former. The H∞ optimal fault observers in design have the robustness with respect to model uncertainties, disturbance and diagnosis uncertainties. The Compensation PD controller ensures the attitude error maintains to a small set around the equilibrium point even though the gyro and star sensor faults occur simultaneously. Simulation results demonstrate the effectiveness and feasibility of the proposed control algorithm.