This paper proposes an effective method of fault location based on a binary tree for optical burst switching (OBS) network. To minimize the monitoring cost, we divide the network into several monitor domains by introducing monitoring-cycle algorithms. In order to generate an exclusive code, we modify the monitoring cycle algorithm when two nodes have the same code. Through the binary tree algorithm, a pre-computation of faults in the OBS network can be achieved. When a fault happens, we can locate it immediately and accurately. Examples have proved that the algorithm has general applicability. This work has been supported by National High Technology Research and Development Program of China (863 Program: 2005AA122310), the Program for New Century Excellent Talents in University (NCET) of the Ministry of Education of China, the Projects of the Education Council of Chongqing (KJ060508, KJ060513, KJ080513), the Projects of the Science and Technology Council of Chongqing (2005AC2089) and the Research Fund for the Doctoral Program of Chongqing University of Posts and Telecommunications(A2007-60).