This paper presents an adaptive observer for speed sensorless field-oriented control of interior permanent magnet (IPM) synchronous motors. The observer detects the rotor magnet flux components in the two-phase stationary reference frame using the motor electrical equations. The motor speed is identified by a model reference adaptive scheme using an additional equation obtained by a Lyapunov function. The analytical development of the observer is fully explained. The convergence of the estimates at low speeds and standstill is achieved through the assistance of a high frequency signal injection technique. Realistic simulations accounting for the inaccuracy of an actual digital signal processor (DSP) implementation are presented and discussed.