An approach for fault diagnosis and restoration in the excitation systems of multi-machine power systems is presented in this paper. The approach is capable of detecting and locating faults in any exciter anywhere in the system with high accuracy using simple fuzzy logic. The use of logic only implies that faults can be detected in near real time. Once the fault is detected, the excitation is immediately adjusted to control the field current and thus the terminal voltage of the affected generator and also to ensure stability of the whole system. The high accuracy and real-time aspects of the proposed approach are verified through case studies performed on IEEE 30 bus power system.