A pulse-width modulation (PWM) inverter controller compensates for harmonics in the output current provided by a PWM inverter to permanent magnet (PM) motor. The PWM inverter controller includes a field-oriented controller (FOC) that monitors output currents provided by the PWM inverter to the PM motor and employs the monitored output currents in a current loop feedback that generates control signals. A harmonic compensator transforms monitored phase currents into rectangular waveforms having magnitudes modified based on detected harmonics within the monitored phase currents to generate compensation signals. The compensation signals generated by the harmonic compensator are summed with the control signals generated by the FOC to generate compensated control signals. A PWM signal generator generates PWM signals for controlling the PWM inverter based on the compensated control signals.