In this paper, we study the fault diagnosis problem for distributed discrete event systems. The model assumes that the system is composed of distributed components that are modeled in labeled Petri nets and interact with each other via sets of common resources (places). Further, a component's own access to a common resource is an observable event. Based on the diagnoser approach proposed by Sampath et al, a distributed fault diagnosis algorithm with communication is presented. The distributed algorithm assumes that the local diagnosis process can exchange messages upon the occurrence of observable events. We prove the distribute diagnosis algorithm is correct in the sense that it recovers the same diagnostic information as the centralized diagnosis algorithm. And then, the OBDD (Ordered Binary Decision Diagrams) is introduced to manage the state explosion problem in state estimation of the system.