This lecture covers fault simulation in VLSI testing, where a fault simulator predicts the behavior of a faulty circuit to determine test quality, improve product quality, and guide test pattern generation. It explains fault coverage, fault models, fault dropping, fault sampling, algorithms for fault simulation, types of fault simulators (serial, parallel, deductive, concurrent), and the implementation of fault models in the simulator. The deductive fault simulation process, propagation rules for main Boolean gates, and compact representation of propagation rules are also discussed, along with examples to illustrate fault propagation through circuits.