This paper proposes an online diagnosis method that adopts inductive coupling technique to realize noncontact cable fault diagnosis; the method solves the problems of large signal attenuation of capacitive coupling and poor diagnosis effect in existing noncontact detection approaches. Compared with contact diagnostic methods, noncontact diagnosis approaches avoid the electrical connection between diagnostic device and the cable under test, and is safer and more convenient. Firstly, based on the main factors (mutual inductance, broadband signal coupling ability) that affect inductive coupling method, the paper analyzes theoretically the materials and parameter characteristics of the coupler under ideal condition in which the diagnosis effects are the same for inductive coupling method and contact, direct injection method; the inductive coupler is analyzed and designed. Then, theoretical analysis and simulation verify that even if the inductive coupler suffers from the influence of actual parasitic parameters, the signal attenuation of inductive coupling is still less than that of capacitive coupling. At last, experiment results verify that the detection rate of inductive noncontact cable fault diagnosis reaches to above 93%, the positioning error is less than 0.42 meters. The proposed method has great actual application value.