A paper cup forming machine performs the entire process to produce paper cups. Recently, as the demand for paper cups in various fields increases, the need for rapid and timely paper cup forming also increases. However, the more rapid the manufacturing speed is, the higher the possibility of forming failure. Frequent fault occurrences cause a time-consuming and costly repair process and reduces manufacturing efficiency. Among various fault factors in this research, position deviation of the paper from the original position, which induces a jamming and process stop, was selected and a novel deviation detecting system using multiple photo sensors was suggested. Before operating the position detecting system, the performance of the photo sensors was evaluated with respect to response speed and photo beam precision. A deviation detecting mechanism was designed. The developed deviation detecting system was integrated with the paper cup forming machine and experimented with using base papers. It was conformed that the suggested system could be used to diagnose paper deviation failure.