The problem of simultaneously accommodating unknown sensor biases and unknown actuator failures in uncertain systems is considered in a direct model reference adaptive control (MRAC) setting for state tracking using state feedback. Sensor biases and actuator faults may be present at the outset or may occur at unknown instants of time during operation. A modified MRAC law is proposed, which combines sensor bias estimation with control gain adaptation for accommodation of sensor biases and actuator failures. This control law is shown to provide signal boundedness in the resulting system. For the case when an external asymptotically stable sensor bias estimator is available, an MRAC law is developed to accomplish asymptotic state tracking and signal boundedness. For a special case wherein biases are only present in the rate measurements and bias-free position measurements are available, an MRAC law is developed using a model-independent bias estimator, and is shown to provide asymptotic state tracking with signal boundedness. Joshi, Suresh M. Langley Research Center NASA/TM-2012-217341, L-20104, NF1676L-13944