The optimal test sequence design for fault diagnosis is critical to NP-complete problem. An improved differential evolution (DE) algorithm with additional inertial velocity item is proposed to solve the optimal test sequence problem (OTP) in complicated electronic system. The proposed inertial velocity differential evolution (IVDE) algorithm is constructed based on adaptive differential evolution algorithm. IVDE, combined with a new individual fitness function, optimizes the test sequence sets with the index fault isolation rate(FIR)satisfied in top-down to generate diagnostic decision tree and decrease the test sets and the cost test. Simulation results show that IVDE algorithm can cut down the test cost with the satisfied FIR. Compared with the other algorithm such as particle swarm optimizer(PSO)and genetic algorithm(GA), IVDE can get better solution to OTP.