Health monitoring of current complex systems significantly impacts the total cost of the system. Centralized fault diagnosis architectures are sometimes prohibitive for large-scale interconnected systems, such as distribution systems, telecommunication networks, water distribution networks, or fluid power systems. Confidentiality constraints are also an issue. This article presents a decentralized fault diagnosis method that only requires the knowledge of local models and limited knowledge of their neighboring subsystems. The method, implemented in the decentralized diagnoser design (D³) algorithm, is based on structural analysis and can advantageously be applied to high-dimensional systems, linear or nonlinear. Using the concept of isolation on request, a hierarchy is built according to diagnostic objectives. The resulting diagnoser is based on analytical redundancy relations (ARRs) generated along the hierarchy. Their number is optimized via binary integer linear programming (BILP) while still guaranteeing maximal diagnosability at each level. D³ proves of lower time complexity than its centralized equivalent. It is successfully applied to a nonlinear combined cycle gas-turbine power plant.