Rotating machinery becomes more and more large and complex, increasingly high degree of automation. Rotating machinery fault could easily lead to heavy losses. Therefore, the requirements of monitoring and diagnosis systems are increasing high. In this paper, the superiority of the application of virtual instrument on condition monitoring and diagnosis system building in the industrial production is described. And then, the rotor system as the main research object, a rotating machinery condition monitoring and diagnosis system is built by using Virtual Instrument technology. At the same time, the structure of the condition monitoring and diagnosis system is discussed. Besides, data acquisition process and fault features recognition method are discussed as well. Finally, the correctness and accuracy of fault detection are verified by means of experiments.