This study presents an open-circuit fault diagnosis method for a fault-tolerant three-level neutral-point-clamped static synchronous compensator (STATCOM). Since STATCOM only outputs reactive current, misdiagnosis may occur by utilising conventional methods. The proposed method relies on the measurement of three-phase currents and is able to identify the faulty switch within 10 ms. The diagnosis method uses the residuals of three-phase currents to detect the faults and locate the faulty switch pair. In addition, the root-mean-square value of the faulty phase current for a quarter of the current period is used to identify the faulty switch. Only the sensors that already exist in the system are required for the diagnosis method, which avoids the use of additional hardware circuits. Experimental results demonstrate the effectiveness and robustness of the proposed fault diagnosis strategy.