An approach to ensure sensor fault resilient operation of permanent magnet synchronous generator (PMSG) based wind energy conversion system (WECS) has been presented in this paper. Sensors measuring WECS quantities such as generator and grid side currents, generator speed and DC link voltage play essential role in reliable and efficient operation of PMSG based WECS. Malfunctioning of such sensors can significantly disrupt the efficient operation of WECS. The proposed approach complements WECS control systems with sliding mode observer (SMO) based fault diagnosis (detection and estimation) and mitigation components to ensure sensor fault resilient operation of the WECS. The efficacy of the proposed approach is validated through rigorous simulation studies carried out on a WECS connected to a practical test distribution system, which clearly demonstrates that the proposed approach is capable of nullifying the impact of sensor malfunctioning and ensuring efficient and optimal operation of WECS.