Abstract This paper investigates observer parameterizations and its application to observer-based fault detection for nonlinear systems. With the aid of coprime factorization techniques, the observer parameterization forms are first derived in terms of input-to-output approach and state space representation. To further implement the methodology, one design scheme is proposed for the so-called affine nonlinear systems. Then, the application of the proposed observer parameterization form to observer-based fault detection is studied. In the end, a numerical example is given to demonstrate the efficiency of our proposed scheme.