This paper presents a new method to compensate the non-linearity for matrix converter drives using PQR instantaneous Power theory. The non-linearity of matrix converter drives such as commutation delay, turn-on and turn-off time of switching device, and on-state switching device voltage drop is modelled by PQR power theory and compensated using a reference current control scheme. The proposed method does not need any additional hardware and off-line experimental measurements. The proposed compensation method is applied for high performance induction motor drives using a 3 kW matrix converter system without a speed sensor. Simulation and experimental results show the proposed method using PQR power theory Provides good compensating characteristic.