The problem of fault detection for networked control systems with respect to packet dropouts is investigated in this paper based on average dwell time method. For the cases that there may be sensor stuck failure and packet dropouts, the networked control systems are modeled as discrete time switched systems. Subsequently, a novel fault detection scheme, which is valid to detect the failures with small magnitudes even the outage ones, is proposed by making the generated residuals sensitive to servo inputs in faulty cases and robust against it in normal case. By utilizing the average dwell time method, new sufficient conditions, which include some existing results, for characterizing the sensitivity performance and the attenuation performance are presented in terms of linear matrix inequalities. Meanwhile, the relation between the packet dropout rate and the system performance is established. Finally, an application of a linearized aircraft is given to demonstrate the effectiveness of the proposed results. Copyright © 2014 John Wiley & Sons, Ltd.