Background: Research on causal reasoning often uses group-level data analyses that downplay individual differences and simple reasoning problems that are unrepresentative of everyday reasoning. In three empirical studies, we used an individual differences approach to investigate the cognitive processes people used in fault diagnosis, which is a complex diagnostic reasoning task. After first showing how high-level fault diagnosis strategies can be composed of simpler causal inferences, we discussed how two of these strategies--elimination and inference to the best explanation (IBE)--allow normative performance, which minimizes the number of diagnostic tests, whereas backtracking strategies are less efficient. We then investigated whether the use of normative strategies was infrequent and associated with greater fluid intelligence and positive thinking dispositions and whether normative strategies used slow, analytic processing while non-normative strategies used fast, heuristic processing. Results: Across three studies and 279 participants, uses of elimination and IBE were infrequent, and most participants used inefficient backtracking strategies. Fluid intelligence positively predicted elimination and IBE use but not backtracking use. Positive thinking dispositions predicted avoidance of backtracking. After classifying participants into groups that consistently used elimination, IBE, and backtracking, we found that participants who used elimination and IBE made fewer, but slower, diagnostic tests compared to backtracking users. Conclusions: Participants' fault diagnosis performance showed wide individual differences. Use of normative strategies was predicted by greater fluid intelligence and more open-minded and engaged thinking dispositions. Elimination and IBE users made the slow, efficient responses typical of analytic processing. Backtracking users made the fast, inefficient responses suggestive of heuristic processing.