Abstract—The highly stochastic nature of wireless environments makes it desirable to monitor link loss rates in wireless sensor networks. In this paper, we study the loss inference problem in sensor networks with network coding. Unlike traditional transmission protocols, network coding offers reliable communication without using control messages for individual packets. We show, however, that network coding changes the fundamental connection between path and link loss probabilities such that new inference algorithms need to be developed. As endto-end data are not sufficient to compute link loss rates precisely, we propose inference algorithms based on Bayesian principles to discover the set of highly lossy links in sensor networks. We show that our algorithms achieve high detection and low false-positive rates through extensive simulations.