Fault detection and isolation on hydraulic systems are very important to ensure safety and avoid disasters. In this paper, a fault detection and isolation method, based on the flatness property of nonlinear systems, is experimentally applied on the three-tank system, which is considered as a popular prototype of hydraulic systems. Specifically, fault indicators, called residues, are generated using flat output measurements, and for the purpose of fault isolation, a definition of the isolability is introduced. This definition allows the characterization of flat outputs that are useful for fault isolation. Multiplicative faults are considered on sensors and actuators.