Real-time and accurate fault detection and isolation is very important to ensure the reliability and precision of integrated inertial navigation and global navigation satellite systems. In this paper, the detection performance of a residual chi-square method is analysed, and on this basis an improved method of fault detection is proposed. The local test based on a standardised residual is introduced to detect and identify faulty measurements directly. Differing from the traditional method, two appropriate thresholds are selected to calculate the weight factor of each measurement, and the gain matrix is adjusted adaptively to reduce the influence of the undetected faulty measurement. The sliding window test, which uses past measurements, is also added to further improve the fault detection performance for small faults when the local test based on current measurements cannot judge whether a fault has occurred or not. Several simulations are conducted to evaluate the proposed method. The results show that the improved method has better fault detection performance than the traditional detection method, especially for small faults, and can improve the reliability and precision of the navigation system effectively.