Current satellite operations involve labor-intensive command and control under constant supervision. At the moment, spacecraft actuator failures are addressed by uploading new instructions or by sending manned missions to rendezvous and apply in-orbit servicing which impart additional mission costs and resource expenditures. With the future trend of building small-satellite systems, established hardware redundancy solutions will becoming increasingly difficult to implement. This thesis addresses fault tolerant satellite attitude and formation control through the development of a fault observer and autonomous re-configurable control law. The proposed technique can estimate and track actuator faults and states in the presence of sensor measurements, model uncertainties and disturbances. Similarly, the fault recovery scheme can perform under the same conditions and can converge to desired states in the event the spacecraft becomes underactuated. Numerical orbital simulations and hardware-in-the-loop experiments verify the fault estimation technique both in theory and practice.