In future, existing hydraulic braking systems will be replaced by electronic braking systems called brake-by-wire (BBW). The BBW units such as electromechanical brake (EMB) are lighter than hydraulic brakes and relatively faster in response. However, the most important issue for adopting BBW units to vehicle is the reliability of their performance. Partial or complete failure of the BBW units can cause not only dangerous situations but also liability for damages. In this study, a sensor fault diagnosis method is proposed by combining parity space and observer design approaches for EMB sensors; current sensor and position (or speed) sensor. The residual generator is constructed to detect sensor faults and fault sizes are estimated using the generated residual information. The EMB model as well as the proposed fault detection and estimation methods is verified in the EMB hardware-in-the-loop simulation (HILS) test bench.