A new bearing fault recognition method based on volterra series and HMM is proposed. In the proposed method, first the feature vectors are extracted from amplitude demodulated signals obtained from normal, ball, inner and outer faulty bearings. The feature vectors are based on the volterra series of the vibration signals, which is obtained by the subspace method. Then these feature vectors are input to each fault’s HMM to be recognized. The result of experiment shows that the proposed method is very effective. The proposed method is tested with the experiment data sampled from drive end ball bearing of an induction motor driven mechanical system.