This paper presents a fault signal reconstruction method for current sensors in an interleaved buck DC–DC converter, utilizing a sliding mode observer (SMO). A filter bank is used to design the observer within an extended-order system, effectively treating sensor faults as actuator faults, which enables precise estimation of the fault signal. Thus, the proposed approach allows for the identification of the faulty sensor and supports the implementation of fault-tolerant strategies. The paper provides an in-depth analysis of current sensor faults, verifies their impact on current balancing control, and demonstrates the challenge of achieving error-free current estimation in one phase using observers. A comprehensive set of simulation results is carried out, validating the method’s effectiveness and showing a strong correlation with theoretical principles.