In this paper, photovoltaic (PV) string failure analysis and health monitoring of PV modules based on a low-cost self-powered wireless sensor network (WSN) are presented. Simple and effective fault detection and diagnosis method based on the real-time operating voltage of PV modules is proposed. The proposed method is verified using the developed health monitoring system which is installed in a grid-connected PV system. Each of the PV modules is monitored via WSN to detect any individual faulty module. The analysis of PV string failure includes several electrical fault scenarios and their impact on the PV string characteristics. The results show that a degraded or faulty module exhibits low operating voltage as compared to the normal module. The developed health monitoring system also includes a graphical user interface (GUI) program which graphically displays the real-time operating voltage of each module with colors and thus helping users to identify the faulty modules easily. The faulty modules identification approach is further validated using the PV module electroluminescence (EL) imaging system.