Nowadays, complex hybrid systems, whose behavior combines continuous and discrete event dynamics, are applied in many engineering applications, from electrical circuits to aircraft systems. However, diagnosis of hybrid system, which is composed of components involving multiple modes, demands unfordable computation due to high complexity and its exponential behaviors caused by combinational explosion. The complexity of the hybrid system makes the online fault diagnosis challenging. Typical traditional model-based approaches for hybrid systems make use of global, monolithic system models for online analysis, which result in a loss of scalability and efficiency. To tackle this problem, this paper proposes a Possible Conflicts (PC) based distributed diagnosis method which 1) models hybrid system with Concurrent Probabilistic Hybrid Automation (cPHA) guaranteeing the robustness; 2) decomposes original system by PC so as to diagnose subsystems concurrently; and 3) employs Focused Hybrid Estimation (FHE) to estimate the most likely hybrid states (including discrete mode and continuous state) for each subsystem. In conclusion, we combine PC, cPHA and FHE in our distributed diagnosis method, which is an accurate and timely online fault diagnosis approach for state estimation of hybrid system. Finally, by using the method in a three-tank system, the advantage of such method is verified by the experimental results.