A decentralized control structure is introduced into the heating, ventilation, and air conditioning (HVAC) system to solve the high maintenance and labor cost problem in actual engineering. Based on this new control system, a decentralized optimization method is presented for sensor fault repair and optimal group control of HVAC equipment. Convergence property of the novel method is theoretically analyzed considering both convex and nonconvex systems with constraints. In this decentralized control system, traditional device is fitted with a control chip such that it becomes a smart device. The smart device can communicate and operate collaboratively with the other devices to accomplish some designated tasks. The effectiveness of the presented method is verified by simulations and hardware tests.