This paper proposes a new method for the analysis and design of sliding mode observers for sensor fault reconstruction. The proposed scheme addresses one of the restrictions inherent in other sliding mode estimation approaches for sensor faults in the literature (which effectively require the open-loop system to be stable). For open-loop unstable systems, examples can be found, for certain combinations of sensor faults, for which existing sliding mode and unknown input linear observer schemes cannot be employed, to reconstruct faults. The method proposed in this paper overcomes these limitations. Simulation results demonstrate the effectiveness of the design framework proposed in the paper. (C) 2009 Elsevier Ltd. All rights reserved.