A fault isolation system in a network is disclosed, particularly suited for use in a unidirectional fibre channel arbitrated loop. Information relating to read and write errors occurring on the loop is stored, and fault regions are located by determining areas on the loop downstream of write errors and upstream of read errors. The system may be extended to networks with bidirectional communications by storing directionality information with the detected errors. Command and response error information is not needed to deterministically locate the fault regions. When a given fault region is identified, loop and device diagnostics are executed for that region of the loop to specifically identify the failed components.