Mining machines are strongly nonlinear systems, and their transmission vibration signals are nonlinear mixtures of different kinds of vibration sources. In addition, vibration signals measured by the accelerometer are contaminated by noise. As a result, it is inefficient and ineffective for the blind source separation (BSS) algorithm to separate the critical independent sources associated with the transmission fault vibrations. For this reason, a new method based on wavelet de-noising and nonlinear independent component analysis (ICA) is presented in this paper to tackle the nonlinear BSS problem with additive noise. The wavelet de-noising approach was first employed to eliminate the influence of the additive noise in the BSS procedure. Then, the radial basis function (RBF) neural network combined with the linear ICA was applied to the de-noised vibration signals. Vibration sources involved with the machine faults were separated. Subsequently, wavelet package decomposition (WPD) was used to extract distinct fault features from the source signals. Lastly, an RBF classifier was used to recognize the fault patterns. Field data acquired from a mining machine was used to evaluate and validate the proposed diagnostic method. The experimental analysis results show that critical fault vibration source component can be separated by the proposed method, and the fault detection rate is superior to the linear ICA based approaches.