Abstract: This study proposed the distributed reconfiguration algorithm that used for reconfiguring internal functions in cell-based hardware system when faults occur in a system. A traditional reconfigure mechanism is an external circuit to transfer new configuration bits into a system which a weak point in fault tolerant perspective. Consequently, we proposed an alternative reconfiguration mechanism that combines a functional unit and a distributed reconfiguration control unit. The control unit is operated by the distributed reconfiguration algorithm for recovering faults in internal functions. The control unit can detect a fault, diagnose status of adjacent control unit and functional modules and take control over on a faulty control unit and reconfigure functional modules for recovering faults in adjacent units. This paper shows how the proposed mechanism can use to recover a single fault and multiple faults. The experimental result shows 80-100% repair rates on simple circuits and ITC’99 benchmark circuits.