After a brief introduction on vehicle steering system and its history of development and promotion, steer-by-wire (SBW) system as the best candidate for future vehicle steering is introduced. Reliability improvement as the most important challenge of the SBW system, is the main target of this project. Firstly, the SBW system and its components are introduced in detail and the accepted level of reliability for such system is discussed based on what is disseminated in authentic standards. Then, the proposed relevant techniques proposed so far in literature for SBW system reliable development are reviewed. These include application of mechanical backup, mechanical redundancy, analytical redundancy, change in control method, all-wheel drive structure, and advanced control techniques. In this way, several control techniques are investigated and finally, one of the best ones is used for the introduction of the SBW system proposed in this thesis. In order to improve the SBW system reliability, new methods are presented to have a fault-tolerant SBW system against angle, electrical voltage current, and torque sensors’ faults. A fault detection, isolation and reconstruction (FDIR) unit has a key role for SBW system to do its tasks in faulty conditions without any catastrophic interruption. The FDIR unit benefits from various techniques including comparing sensors outputs, control method alteration, virtual sensors and open-loop control methods. After system introduction and theoretical discussion, the SBW system is simulated in MATLAB/Simulink. The electric motors are simulated by using dynamic equations and controlled using vector control technique in rotor-reference frame and employing SV-PWM inverter. Then, these two electric motor-drives are controlled using the proposed control scheme to study the SBW system performance. Also, the CarSim software is used to investigate the vehicle dynamic behavior equipped with the proposed SBW system. The angle and torque estimation are added in next step. Afterwards, a FDIR unit is developed in order to detect possible faults in voltage, current, angular position and torque sensors with the aim of faulty sensor isolation and output reconstruction using alternative analytical solutions. The proposed SBW system performance under various faulty conditions is investigated. Implementing the FDIR unit, the proposed SBW system can endure faults in different sensors and keep working without any interruption.