This paper concentrates on sensorless control of surface permanent magnet synchronous motor (SPMSM) when LC filter is equipped in the inverter output terminal to suppress the adverse effects of pulse width modulation (PWM) waves. If the filter is connected in cables, the mathematical model and order of motor drive system are changed. Hence, conventional sensorless estimation methods on basis of the mathematical model may be invalid. Furthermore, if better control performance is expected, a filter controller is necessary. In this study, a simple state observer based on the mathematical model of the motor and LC filter is proposed to estimate the back electromotive forces (BEMFs) in the stationary axis, then the rotor speed and position angle are estimated by a phase locked loop (PLL). In order to improve the control response and stability, a sliding mode LC filter controller which is embedded in the conventional vector control algorithm is proposed. In the drive system, besides the current measurements near the inverter, no extra current or voltage measurements are necessary because all the variables needed are estimated by the observer and PLL. Simulation and experimental results are presented to verify the validity of the proposed strategy.