Rolling bearings are widely used in various areas including aircraft, mining, manufacturing, and agriculture, etc. The breakdowns of the rotational machinery resulted from the rolling bearing failures account for 30%. It is therefore imperative to monitor the rolling bearing conditions in time in order to prevent the malfunctions of the plants. In the present paper is described a fault detection and diagnosis technique for rolling bearing multi-faults based on wavelet-principle component analysis (PCA) and fuzzy k-nearest neighbor (FKNN). In the diagnosis process, the wavelet analysis was firstly employed to decompose the vibration data of the rolling bearings under eight different operating conditions, and for each sample its energy of each sub-band was calculated to obtain the original feature space. Then, the PCA was used to reduce the dimensionality of the original feature vector and hence the most important features could be gotten. Lastly, the FKNN algorithm was employed in the pattern recognition to identify the conditions of the bearings of interest. The experimental results suggest that the sensitive fault features can be extracted efficiently after the wavelet-PCA processing, and the proposed diagnostic system is effective for the rolling bearing multi-fault diagnosis. In addition, the proposed method can achieve higher performance than that without PCA with respect to the classification rate.