A system and related method for monitoring the state of health of sensors in an integrated vehicle stability control system. In one embodiment, the system determines whether a yaw rate sensor, a lateral acceleration sensor or a hand-wheel angle sensor has failed. The system uses a plurality of models to generate estimates of the outputs of the sensors based on the actual sensor measurements. Residuals are generated as the difference between the measured value and each of the estimates for the particular sensor. The residuals are compared to a threshold to determine whether a fault flag will be set for each residual. The threshold for the hand-wheel angle sensor is an adaptive threshold because it does not have physical redundancy. If the fault flags for the residuals for each sensor have a particular pattern, then a fault is output for that sensor.