The viability of many new technologies for improving the drivability and safety of a vehicle has improved with the availability of advanced software and hardware tools. On-line diagnosis of steering system faults is one such area on which a lot of attention has been focused. When used in a manually driven automobile this technology can improve the safety of the vehicle by providing the driver with the fault information. While when used with a computer controlled steering (as envisaged in many of the IVHS technologies) it is of even greater importance, because electronic fault information is crucial to the proper functioning of many such systems. This paper deals with the design of a linear unknown input observer (UIO) based residual generator for steering system diagnosis. The observer was designed based on an accepted model of the automatic car steering problem. The observer was validated through experiments conducted on the OSU-autonomous vehicle.