The precise and reliable loss model for induction motor and converter system is very important in order to predict the efficiency performance of variable speed drives. This paper proposes an accurate loss model of induction motor and converter system. The motor losses, such as stator and rotor copper loss, core loss and stray loss, are considered for fundamental and harmonic frequencies. Also considered are the skin effect on rotor resistance, temperature effect on bath stator and rotor resistance, magnetizing inductance saturation, and friction and windage loss. All the above features are incorporated in a synchronous frame dynamic d-q equivalent circuit. The converter system, consisting of a diode rectifier and PWM transistor inverter, is modeled accurately for conduction and switching losses. Validity of the models, in both steady state and transient conditions, is verified by simulations.