To improve the maneuverability, stability, and reliability of the steer-by-wire system, a two-way H control method with a fault-tolerant module is proposed in this paper. First, a two-way H control scheme is proposed. Two controllers are designed in this scheme: one is used as a feedback controller as a general practice to stabilize the system and detect the tracking error; the other is used as a feed forward controller to make the output of the system follow the driver’s steering intention rapidly and precisely. Second, a fault-tolerant module aiming at front wheel angle sensor which is an important feedback signal to the system is added to improve the reliability of the system. A revised Kalman filter is applied in the fault-tolerant module to reconfigure the front wheel angle as a reference value and a substitute when the sensor fails, thus replacing hardware redundancy by software redundancy in a cost-effective way. Lastly, simulations by Matlab/Simulink and CarSim software and hardware-in-the-loop experiments are conducted and effectiveness of the proposed control method is demonstrated by simulation and experimental results and numerical analyses.