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Solar photovoltaic PV plants worldwide are continuously monitored and carefully protected to ensure safe and reliable operation through detecting and isolating faults. Faults are very common in modern solar PV systems which interrupt normal system operation adversely affecting the performance of the PV systems. When undetected, faults not only cause significant reduction in the efficiency and life span of the PV system, but also result in damage and fire hazards compromising their reliability. Therefore, early fault detection and diagnosis of photovoltaic plants is a necessity for safe and reliable operation required for growing solar PV systems. Unfortunately, several recent fire incidents have been reported recently caused by undetected faults in solar PV systems. Motivated by this challenge, this paper, utilizing a proposed fuzzy logic algorithm, presents a novel technique for detecting and classifying faults in solar PV systems. Furthermore, the proposed method introduces fault indexing as a performance indicator that measures the degree of deviation from the normal operating conditions of the photovoltaic system. Various signatures of each fault scenario are identified in the shape of corresponding current-voltage trajectories and their extracted parameters. The effectiveness of the proposed technique is evaluated both in simulation and experimentally using a 5 kW grid connected solar array. It is demonstrated that the proposed technique is capable of diagnosing the occurrence of different faults with more than 98% accuracy.