In this paper, fault-tolerant controller design problem for Lipschitz nonlinear fractional-order systems in presence of sensor fault is considered. By using the descriptor system theory, a correct estimation of the state vector is achieved and then by using it, a stabilizing state feedback controller is designed. By employing some appropriate techniques, parameters design of the observer and controller are stated in terms of linear matrix inequalities, which there exist powerful toolbox for solving them. The proposed observer can estimate the correct value of the sensor fault vector, thus, it can be utilized for the fault detection, isolation, and identification unit. Besides, the structure of the proposed method is such that the observer and controller design can be performed independently, which facilitate the design process. The effectiveness of the proposed method is shown with numerical simulation results.