It is proposed that the rotor time constant and inductance are compensated at the same time in the indirect vector control method of an induction motor. The proposed scheme compensates the rotor time constant using the difference between the Q-axis real stator current and estimated current that is calculated from the terminal voltage and current, and compensates inductance by using the difference between the D-axis real stator flux and estimated stator flux in the synchronous rotating reference frame. Although the rotor time constant and inductance vary at once, the proposed method compensates the rotor time constant and inductance with accuracy. In addition to, two variables can be compensated not only at the steady state condition, but also at the transient state, where the torque varies in a rectangular pulse waveform. Therefore, the performance of vector control is greatly improved as verified by experiment.