Condition monitoring of permanent magnet synchronous motors (PMSMs) is the process which identifies and averts any serious fault and is of critical importance for reliability and robustness of the system. In this study, broken/crack magnet fault in PMSMs and the consequence effects of such failure on stator back-emf and current wave forms are investigated. For this purpose, a three phase, 8-pole permanent magnet surface mounted (PMSM) motor is modeled using 2-D Finite Element (FE) analysis. Three types of cracks with the same area and different directions are created on one rotor magnet to investigate the effect of the direction of the cracks on the fault signatures. Fast fourier transform (FFT) is used to analyze the stator current and back-emf signatures. Both faulty and healthy motors are simulated at different speed and load to scrutinize the effect of these two parameters on the fault signatures. To verify the analysis results, an experimental setup is used to support the results.