The fault detection problem for the nonlinear networked control system (NCS) with packet dropout and delay is investigated. A nonlinear stochastic system model is proposed to account for the NCS with random packet dropout and networkinduced non-uniformly distributed time-varying delay in both from sensor to controller (S/C) and from controller to actuator (C/A). Based on the obtained NCS model, employing an observer-based fault detection filter as the residual generator, the addressed fault detection problem is converted into an auxiliary nonlinear H∞ control problem. Then, with the help of Lyapunov functional approach, a sufficient condition for the desired fault detection filter is constructed in terms of certain linear matrix inequalities, which depend on not only the delay interval but also the delay interval occurrence rate and successful packet communication rate. Especially, a trade-off phenomenon between the maximum allowable delay bound and successful data packet transmission rate is found, which is typically resulted from the limited bandwidth of communication networks. The effectiveness of the proposed method is demonstrated by a simulation example.