In this paper, a digital signal processor-based phase-sensitive motor fault signature detection technique is presented. The implemented method has a powerful line current noise suppression capability while detecting the fault signatures. Because the line current of inverter-driven motors involve low-order harmonies, high-frequency switching disturbances, and the noise generated by harsh industrial environment, the real-time fault analyses yield erroneous or fluctuating fault signatures. This situation becomes a significant problem when the signal-to-noise ratio of the fault signature is quite low. It is theoretically and experimentally shown that the proposed method can determine the normalized magnitude and phase information of the fault signatures even in the presence of noise, where the noise amplitude is several times higher than the signal itself. Since it has low computational burden, the developed algorithm is embedded to the motor control program without degrading drive performance. Therefore, it is implemented without any additional cost using readily available drive processor and current sensors.