The advancement in low cost and low power MEMS sensors makes it possible to develop a cost-effective wireless accelerometer for condition monitoring. Especially, the MEMS accelerometer can be mounted directly on a rotating shaft, which has the potential to capture the dynamics of the shaft more accurately and hence to achieve high monitoring performance. In this paper a systematic comparison of shaft misalignment detection is conducted, based on a bearing test rig, between the wireless sensor measurement scheme and other three common sensors: a laser vibrometer, an accelerometer and a shaft encoder. These four sensors are used to measure simultaneously the dynamic responses: Instantaneous Angular Speed (IAS) from the encoder, bearing house acceleration from the accelerometer, shaft displacements from the laser vibrometer and angular acceleration from the wireless sensor. These responses are then compared in both the time and frequency domains in detecting and diagnosing different levels of shaft misalignment. Results show the effectiveness of wireless accelerometer in detecting the faults.