Novel vibration residual technology is applied for the first time for detecting a partly-missing (chipped) tooth in a gearbox of the machine fault simulator (MFS). One stage gearbox consists of two bevel gears. The load on the gearbox was applied by a magnetic brake system. An advanced automatic technology for the time synchronous averaging of the raw gear vibrations has been employed; this technology does not require speed data. An advanced technique based on the likelihood ratio is developed for decision making. A partly missing tooth has been continuously detected throughout the whole test duration without false alarms and missed detections.