The invention discloses a displacement sensor fault detection circuit and a control system thereof. The displacement sensor fault detection circuit comprises a power circuit, a short-circuit fault detection circuit, an open-circuit fault detection circuit and a power supply failure fault detection circuit, and further comprises a power supply Vcc1, a power supply Vcc2, a resistor R1, a resistor R3, a resistor R4, a resistor R5, a transistor Q1, a transistor Q2 and a transistor Q3. The input end of the short-circuit fault detection circuit is the signal input end of the displacement sensor fault detection circuit and is grounded through the R1 and the Vcc1, and the output end of the short-circuit fault detection circuit is the signal output end of the displacement sensor fault detection circuit. The base electrode of the Q1 is connected to the signal input end through the R3, the emitting electrode of the Q1 is connected to the positive electrode of the Vcc1, and the collector electrode of the Q1 is grounded through the R4. The base electrode of the Q2 is connected with the collector electrode of the Q1, the emitting electrode of the Q2 is connected to the positive electrode of the Vcc1, and the collector electrode of the Q2 is connected to the signal output end. The emitting electrode of the Q3 is connected with the positive electrode of the Vcc1, the collector electrode of the Q3 is connected with the signal output end, and the base electrode of the Q3 is connected with the positive electrode of the Vcc2 through the resistor R5.