An observer-based, globally asymptotically stable torque and rotor flux magnitude tracking controller for induction motors under magnetic saturation is proposed. The controller is synthesized using the passivity-based techniques. The paper considers a magnetically saturated pi-model of the motor without any simplifying assumptions. Motor fluxes are reconstructed by a closed-loop observer. Closed-loop stability of the overall scheme including the observer is demonstrated. Simulation results are given to illustrate the proposed scheme. (C) 2003 Elsevier Ltd. All rights reserved.