This paper proposes a novel hybrid fault-tolerant control system (HFTCS) with dedicated non-linear controllers: artificial neural network (ANN) and sliding mode control (SMC) for active and passive parts, respectively. The proposed system can provide both desirable properties of stability to unexpected fast disturbances and post-fault optimal performance. In the active fault tolerant control system (AFTCS) part, the fault detection and isolation (FDI) unit is designed through the use of ANN for the estimation of faulty sensor values in the observer model. In the passive fault-tolerant system (PFTCS) part, the air-fuel ratio (AFR) controller is designed using a robust SMC that allows systems to manage faults in predefined limits without estimation. In the proposed system, SMC will form the passive part to react instantly to faults while ANN will optimize post-fault performance with active compensation. Moreover, Lyapunov stability analysis was also performed to make sure that the system remains stable in both normal and faulty conditions. The simulation results in the Matlab/Simulink environment show that the designed controller is robust to faults in normal and noisy measurements of the sensors. A comparison with the existing works also demonstrates the superior performance of the proposed hybrid algorithm.