To eliminate the dependence of the induction motor (IM) flux-oriented control system on position sensors, IM sensorless control based on a full-order state observer is studied in this paper. First, according to the IM rotor flux linkage models of current and voltage, the speed of the full-order state observer for IM and the solution for the feedback matrix are designed. Then, to simplify the expression of the feedback matrix and improve the stability of the observer for high-speed operation, a novel solving method of the feedback matrix by left-shifting the poles of the observer is proposed, and the terms containing rotor speed are simplified. On this basis, a speed estimation method based on the current error and Lyapunov theory is proposed. For low-speed operation, the feedback matrix parameter design method is proposed based on the stability conditions of d–q axis current error model. Finally, the feasibility and effectiveness of the proposed full-order state observer are verified by simulation and experiment. Since the improved full-order state observer can provide accurate speed feedback and rotor flux position for flux-oriented vector control systems, the IM drive system exhibits good steady-state and dynamic performance.