As the most important transmission system of vehicles, the gearbox has a high fault rate, so it is meaningful to evaluate and diagnose its health condition and faults accurately. Autocorrelation -envelope analysis is a fault diagnosis method that can suppress the noise and reserve the periodic components of vibration signals. A conclusion has been deduced: amplitude modulated, frequency modulated, or amplitude& frequency modulated signals can be transformed into amplitude modulated signals with the same modulation frequency through autocorrelation processing. Therefore, the aucorrelation-envelope technique is suitable for extracting the fault features of gearbox from its vibration signal with the coexistence of amplitude modulation and frequency modulation. The simulation results verify the validity of the conclusion and the experiment of vehicle gearbox diagnosis indicates the effectiveness of this method.