Abstract: A sensor error detection and compensation system is disclosed. The system may have a sensor state estimation module that is configured to generate a physical sensor confidence value representing an accuracy estimation of a physical sensor output value received from a physical sensor. The system may also have a sensor output aggregation module configured to determine an aggregated sensor value based on the physical sensor confidence value, the physical sensor output value, a virtual sensor output value received from a virtual sensor, and a virtual sensor confidence value representing an accuracy estimation of the virtual sensor output value. Moreover, the system may have a replace sensor decision module configured to determine whether the physical sensor has failed by comparing the physical sensor confidence value to a replacement threshold level.