Most chemical processes are very large or complex. Because of this size and complexity, it is very difficult to make a diagnostic system for an entire process. Therefore, a systematic approach ief required to decompose a large-scale process into subprocesses and then diagnose them. This paper suggests a method for minimization of the knowledge base and flexible diagnosis to be used in qualitative fault diagnosis based on a fault-effect tree model. The system can be decomposed for flexible diagnosis, size reduction of the knowledge base, and consistent construction of a complex knowledge base. The new node, called, a gate variable, is induced to connect the cause-effect relationships of each subprocess. For on-line diagnosis, off-line analysis is performed to construct both the fault-effect trees and the activation diagnosis for the gate variables. The on-line diagnosis strategy is modified to yield the same diagnosis result without system decomposition. Also, this work establishes that si plus cycle of the gate variables makes the diagnosis fail and proposes a method for resolving the problem of the plus cycle by minimizing the number of fault-propagation paths evaluated. The proposed method is illustrated with a fault diagnosis system for a large-scale boiler plant.