This paper presents an approach for distributed fault isolation in a generic system of systems. The proposed approach is based on the principles of hyperdimensional computing. In particular, the recently proposed method called Holographic Graph Neuron is used. We present a distributed version of Holographic Graph Neuron and evaluate its performance on the problem of fault isolation in a complex power plant model. Compared to conventional machine learning methods applied in the context of the same scenario the proposed approach shows comparable performance while being distributed and requiring simple binary operations, which allow for a fast and efficient implementation in hardware.