An Optical Transport Network (OTN) fault localization method, an iterative OTN fault localization method, and an OTN network use OTN tandem connection monitors operating in a “Monitor” mode to provide fault localization. The methods and network use TCMs for fault localization that can be performed manually or automatically to isolate a fault in a multi-domain OTN network to a particular link, switching fabric, or transport function. Additionally, a roles-based assignment scheme is presented for automatically assigning TCM levels between domains and links in multi-domain OTN networks. The fault localization methods enable fault localization in an automated and non-intrusive manner.