This paper investigates the influence of inverter nonlinearity on the parameter estimation in permanent magnet synchronous machines (PMSM). An estimator based on model reference adaptive system (MRAS) is firstly described for simultaneously estimating the stator winding resistance and rotor flux linkage, together with injection of a pulse of id <; 0 which is required for activating the estimation of stator winding resistance. Then the MRAS estimator with/without the inverter nonlinearity compensation is applied to a prototype surface-mounted PMSM for experimental investigation. It shows that at low speed the inverter nonlinearity compensation has significant influence on both the rotor flux linkage and winding resistance estimation, while at high speed it has only significant influence on the winding resistance estimation but negligible influence on the rotor flux linkage estimation.