This paper addresses robust fault detection observer design for a class of discrete-time Takagi–Sugeno nonlinear systems. A novel design method is presented based on finite-frequency H−/H∞ indices and peak-to-peak analysis. The finite-frequency H− and H∞ indices are utilized to characterize fault sensitivity and disturbance robustness, respectively. The peak-to-peak analysis is used to derive a dynamic threshold. An iterative algorithm is further developed to reduce conservatism. Theoretical proof shows that the performance of the proposed method is not worse than some existing works. Simulation results demonstrate the validity and viability of the proposed method.