This paper describes a highly developed fiber fault isolation technique that can distinguish a fault in branched optical fibers in passive optical network (PONs). This technique provides a promising way of extending the functions of the conventional optical fiber testing and monitoring system. We demonstrate an optical fiber line testing and monitoring system with a high dynamic range that employs a high spatial resolution OTDR (HOTDR) and highly reflective fiber Bragg grating (FBG) filters installed in the front of ONUs on the customers' premises. We also describe a cost effective fiber fault isolation technique that employs frequency domain analysis. These techniques enable us to isolate a fiber fault, reduce maintenance costs and improve service reliability.