Induction motors have been the major actuators in the manufacturing sector. Because they were prone to suffer premature failures in the field, several health monitoring systems were proposed. To facilitate the development of an effective predictive diagnostic system, it is necessary to understand the dynamic behavior and the electro-mechanical interaction of an induction motor by using computer simulation. A dynamic model of the induction motor was developed in this study based on the rotating reference frame for investigating the influence of mechanical and electrical failures, such as load fluctuation and imbalanced stator voltage supply. Multiple approaches, including motor current signature analysis, instantaneous power signature analysis, and Park's vector, were utilized to identify different failure modes. The energy consumption of the motor operated under healthy and faulty conditions was also discussed.