This paper presents the static eccentricity fault diagnosis using time stepping finite element (TSFE) method. In the previous publications on induction motor fault diagnosis by a finite-element method (FEM), steady-state analysis was proposed. White noise, large unbalanced magnetic pull (UMP), and even arc appear during the starting of a faulty induction motor. These phenomena particularly for large induction motor which have longer starting time are very important. In this paper, transient analysis of induction motor under fault is presented. In addition to the static eccentricity fault diagnosis, torque and speed due to the fault are also investigated. In order to show the significant effect of saturation on a faulty induction motor, simulations are carried out for a core with a constant permeability. The results of applying TSFE method and those obtained by application of winding function (WF) theory are compared.