Fisher discriminant analysis (FDA) is a widely used tool for fault diagnosis. In addition, many modifications have also been proposed recently in the literature in order to overcome certain limitations of the traditional FDA method. However, the incipient fault diagnosis problem is not well handled by traditional FDA and its variants. In this paper, through the introduction of smoothing techniques, a new method called smoothed FDA (SFDA) is proposed to enhance the fault diagnosis performance for incipient faults. Fault diagnosability analyses of the FDA and SFDA approaches are carried out and compared with each other. It is pointed out through theoretical analysis that SFDA is superior to FDA in terms of incipient fault diagnosis. Simulation studies on a continuous stirred tank reactor process are used to demonstrate the effectiveness of the SFDA method, in comparison with traditional FDA.