Continuous monitoring of diesel engine performance is critical for early detection of fault developments in an engine before they materialize into a functional failure. Instantaneous crank angular speed (IAS) analysis is one of a few non-intrusive condition monitoring techniques that can be utilized for such a task. Furthermore, the technique is more suitable for mass industry deployments than other non-intrusive methods such as vibration and acoustic emission techniques due to the low instrumentation cost, smaller data size and robust signal clarity since IAS is not affected by the engine operation noise and noise from the surrounding environment. A combination of IAS and order analysis was employed in this experimental study and the major order component of the IAS spectrum was used for engine loading estimation and fault diagnosis of a four-stroke four-cylinder diesel engine. It was shown that IAS analysis can provide useful information about engine speed variation caused by changing piston momentum and crankshaft acceleration during the engine combustion process. It was also found that the major order component of the IAS spectra directly associated with the engine firing frequency (at twice the mean shaft rotating speed) can be utilized to estimate engine loading condition regardless of whether the engine is operating at healthy condition or with faults. The amplitude of this order component follows a distinctive exponential curve as the loading condition changes. A mathematical relationship was then established in the paper to estimate the engine power output based on the amplitude of this order component of the IAS spectrum. It was further illustrated that IAS technique can be employed for the detection of a simulated exhaust valve fault in this study.