This article presents an integrated fault diagnosis and fault-tolerant control (FTC) methodology for a class of nonlinear multi-input-multi-output systems. Based on the fault information obtained during the diagnostic procedure, an FTC component is designed to compensate for the effect of faults. In the presence of a fault, a baseline controller guarantees the boundedness of all the system signals until the fault is detected. After fault detection and then again after isolation, the controller is reconfigured to improve the tracking performance using online fault diagnostic information. Under certain assumptions, the stability and tracking performances of the closed-loop system are rigorously investigated. It is shown that the system signals always remain bounded and the output tracking error converges to a neighbourhood of the origin of the state space.