In this paper, a modified output-feedback multivariable model reference adaptive control (MRAC) scheme is proposed for a valve-actuated quadruple-tank process with actuator faults. First, a controller parametric model with unknown plant parameters is established, and actuator parameters are determined using a unified actuator fault model.Second, some existing proper modifications that allow MRAC to gain the ability of actuator fault compensation are given. Then final adaptive fault compensation controller is constructed by utilizing existing results and a new adaptation law that is based on a method first used for optimization purposes. The resulting controller allows increasing the learning rate of the adaptation algorithm without causing high-frequency oscillation in control signal and eventually leads to a faster smooth postfault transient response and less reference model tracking error. The stability of the proposed controller is proved such that all closed-loop signals are bounded and tracking error asymptotically converges to zero. Finally, process simulation results are given to exhibit the effectiveness of the proposed scheme.