This paper considers fault detection in the case of a three-phase three-wire (3P3W) inverter, when only two current sensors are used to save cost or due to a faulty current sensor. With two current sensors, there is no current method addressing the diagnosis of both IGBT open-circuit (OC) faults and current sensor faults. In order to solve this problem, this paper proposes a method which innovatively combines two kinds of diagnosis variables, line voltage deviations and phase voltage deviations. The unique faulty characteristics of diagnosis variables for each fault are extracted and utilized to distinguish the fault. Using an average model, the method only needs the signals already available in the controller. Both IGBT OC faults and current sensor faults can be detected quickly in inverter mode and rectifier mode, so that the converter can be protected in a timely way to avoid further damages. In addition, error-adaptive thresholds are adopted to make the method robust. Effects such as system unbalance is analyzed to ensure that the method is robust and feasible. Simulation and experimental results are used to verify and validate the effectiveness of the method. NOMENCLATURE vxy (x,y =a,b,c) Line voltages between phase X and phase Y vxN Phase voltage of phase X ix Current of phase X VXY (X,Y = A, B, C) Bridge arm pole-to-pole voltage between phase X and phase Y VXL Bridge arm pole voltage of phase X VNL Voltage between output neutral point and lower point of DC bus Lx Filter inductance of phase X Rx Equivalent resistance of phase X γ Actual value of signal γ γ^ Sampled value of signal γ γ* Estimated value of signal γ Δγ^ Deviation between γ and γ^ Δγ* Deviation between γ and γ*