The sensorless AC motor drive is a popular topic of study due to the cost and reliability of speed and position sensors. Most sensorless algorithms are based on the mathematical modeling of motors including electrical variables such as phase current and voltage. Therefore, the accuracy of such variables largely affects the performance of the sensorless AC motor drive. However, the output voltage of the SVPWM-VSI, which is widely used in sensorless AC motor drives, has considerable errors. In particular, the SVPWM-VSI is error-prone in the low speed range because the constant DC link voltage causes poor resolution in a low output voltage command and the output voltage is distorted due to dead time and voltage drop. This paper investigates a novel high-performance strategy for overcoming these problems in a sensorless ac motor drive. In this paper, a variation of the DC link voltage and a direct compensation for dead time and voltage drop are proposed. The variable DC link voltage leads to an improved resolution of the inverter output voltage, especially in the motor's low speed range. The direct compensation for dead time and voltage drop directly calculates the duration of the switching voltage vector without the modification of the reference voltage and needs no additional circuits. In addition, the proposed strategy reduces a current ripple, which deteriorates the accuracy of a monitored current and causes torque ripple and additional loss. Simulation and experimentation have been performed to verify the proposed strategy.