To reduce current distortion caused by dead time of pulse width modulation inverter in control system, a new on-line dead time compensation method is presented after analyzing the mechanism of dead time effects and harmonics. The proposed method estimates amplitude of error voltage in stationary reference frame. Then calculate the disturbancevoltage using the relationship between the amplitude and rotor position. Finally, the distortion is compensated by adding it to the current loop. This approach does not require additional hardware circuits, off-line measurements and detection of the current polarity. Also it can eliminate the disadvantage of compensation induced by abrupt change of voltage and its realization is simple. The simulation and experimental results show the effectiveness of minimizing harmonic distortions and improving current better.