As the core equipment in ship power systems, the accurate and real-time diagnosis of ship diesel engine faults directly affects navigation safety and operation efficiency. Existing methods (e.g., expert systems, traditional machine learning) can hardly cope with the complex failure modes and dynamic operation environment due to the problems of relying on artificial features and insufficient generalization ability. In this paper, we propose a BiLSTM-CRF-based knowledge graph construction method for ship diesel engine faults, aiming at integrating multi-source heterogeneous data through deep learning and knowledge graph technology, and mining the deep semantic associations among fault phenomena, causes, and solutions. The research framework covers data acquisition, ontology modeling, and knowledge extraction and storage, and the BiLSTM-CRF model is used to fuse bi-directional contextual features with label transfer probability to achieve high-precision entity recognition and relationship extraction. Finally, a scalable knowledge graph is constructed by Neo4j. Experiments show that the model significantly outperforms baseline methods such as HMM, CRF, and BiLSTM, and the graph visualization clearly presents the fault causality network, which supports knowledge reasoning and decision optimization. For example, “high exhaust temperature” can be related to potential causes such as “turbine failure” and “poor cooling”, and recommended measures can be taken. This method not only improves fault diagnosis accuracy and efficiency but also provides a novel method for intelligent ship health management.