This paper analyzes fault tolerance of spacecraft relative navigation in Automated Rendezvous and Docking (AR&D). The relatively low technology readiness of existing relative navigation sensors for AR&D has been carried as one of the NASA Crew Exploration Vehicle Project’s top tasks. Fault tolerance could be enhanced with the help of FDIR (Fault Detection, Identification and Recovery) logic and use of redundant sensors. Because of mass and power constraints, it is important to choose a fault tolerant design that provides the required reliability without adding excessive hardware. An important design trade is determining whether a redundant sensor can be normally unpowered and activated only when necessary. This paper analyzes reliability trades for such fault tolerant system. A Markov Chain model of the system is composed of sub-models for sensor faults and for sensor avionics states. The sensor fault sub-model parameters are based on sensor testing data. The avionics sub-model includes FDIR states; the parameters are determined by Monte Carlo simulations of the near field docking approach. The integrated Markov Chain model allows the probabilities of mission abort and a mishap to be computed. The results of the trade study include dependence of the probabilities on the backup sensor activation delay.