To resolve the high flux and torque ripples and unfixed switching frequency problems of direct torque control (DTC), a dead-beat direct torque control (DB-DTC) was studied for the permanent magnet synchronous motor (PMSM), which not only inherits good dynamic performance from conventional DTC, but also improves the steady state performance. Since stator flux linkage has remarkable impact on the performance of PMSM DB-DTC system, a novel sliding-mode stator flux observer combining the current and voltage flux models together was adopted. The observed stator flux can be corrected by taking the current as the controlled variable and the current error as the feedback variable. Meanwhile, stator flux observer, online resistor identification, position and speed estimation were integrated into one observer in the PMSM DB-DTC system and sensorless control was realized. The experimental results confirmed that the PMSM DB-DTC has good dynamic and steady state performance. In addition, the integrated observer possesses favorable observation performance and is robust to the motor parameters variation.