Satellite faults is one of the main problems in meteorological polar orbiting satellite data processing system. Satellite faults, which is difficult to be monitored and solved, always have serious impact. Current solution adopts threshold algorithm to analyze the telemetry downloaded by satellites. Threshold algorithm works poorly in analyzing volatile telemetry channels. This paper propose a telemetry spectrum analysis based faults diagnosis algorithm, which performs better on volatile telemetry channels. Firstly, some key telemetry channels are FFT transformed, the spectrums are analyzed and some certain frequencies are determined. The basic logic of the algorithm is proposed. Secondly, this paper discuss how to determine the telemetry channel length N based on the orbit characters and monitor requirements. Some typical satellite faults are simulated and diagnosed by this proposed algorithm. Lastly, this proposed algorithm is tested by an authentic satellite fault in history. Tests result shows, this proposed algorithm can diagnose meteorological satellite faults quickly.