In this paper, a novel sliding mode observer-based fault estimation (FE) method is presented for a class of nonlinear networked control systems (NCSs) with Markov transfer delays. Firstly, the nonlinear NCS is described by a nonlinear discrete Takagi–Sugeno (T–S) fuzzy model using the Euler approximation method. Then, a sliding mode based nonlinear discrete observer is proposed such that the sliding motion of the error dynamical system is asymptotically stable on a designed surface. Then the FE can be achieved through this observer. Finally, an example is included to show the efficiency of the proposed method.