To detect faults in an inverter-fed permanent magnet synchronous motor (PMSM) drive under the circumstance having faults in a stator winding and inverter switch, an on-line basis fault detecting scheme during operation is presented. The proposed scheme is achieved by monitoring the second-order harmonic component in q-axis current and the fault is detected by comparing these components with those in normal conditions. The linear interpolation method is employed to determine the harmonic data in normal operating conditions. As soon as the fault is detected, the operating mode is changed to identify a fault type using the phase current waveform. To verify the effectiveness of the proposed fault detecting scheme, a test motor to allow inter-turn short in the stator winding has been built. The entire control algorithm is implemented using DSP TMS320F28335. Without requiring an additional hardware, the fault can be effectively detected by the proposed scheme during operation so long as the steady-state condition is satisfied.