This paper proposes a distributed methodology for detecting and isolating multiple sensor faults in interconnected cyber-physical systems. The distributed sensor fault detection and isolation process is conducted in the cyber superstratum, in two levels. The first-level diagnosis is based on the design of monitoring agents, where every agent is dedicated to a corresponding interconnected subsystem. The monitoring agent is designed to isolate multiple sensor faults occurring in the sensor set of the physical part, while it is allowed to exchange information with its neighboring monitoring agents. The secondlevel diagnosis is realized by applying a global decision logic designed to isolate multiple sensor faults that may propagate in the cyber superstratum through the exchange of information between monitoring agents. The decision making process, executed in both levels of diagnosis, relies on a multiple sensor fault combinatorial logic and diagnostic reasoning. The performance of the proposed methodology is analyzed with respect to the sensor fault propagation effects and the distributed sensor fault detectability.