This work studies model-based fault isolation. A method of fault isolation filter design is developed. The fault to output transfer-function model is obtained using system identification. The basic idea is to formulate the isolation problem as a dual decoupling control problem then use a MPC controller as the decoupler. In this way an efficient algorithm can be developed to obtain the fault isolation filter; time delays and right-half-plane (RHP) zeros can be handled. Model errors that occur during system identification are considered in designing the isolation filter. Optimal fault isolation filters that suppress disturbances are also developed. The method is demonstrated using a simulated 600MW supercritical power generation unit and the Tennessee Eastman process (TEP).