The invention relates to a square wave injected method for estimating the rotor position, after time delay compensation, of a PMSM. A PI current regulator controls the magnitudes of output Ud and Uq voltage vectors, square-wave voltage signals are injected to an estimation d axis when the motor is static, initial positioning is completed in a closed-loop manner, and an N pole is converged rapidly to the real d axis. After that the motor is started smoothly, that rapid change of a load component in the dynamic process generates a high frequency component is taken into consideration, and thus, the bandwidth of a position observer is limited, the position estimating precision is influenced, a BPF is used to eliminate the high-frequency component of the load, a q-axis high-frequency response current is obtained, and the rotor position and speed are estimated via the position observer. At the same time, high-frequency response current distortion caused by lagging of PWM signals is eliminated on the basis of q-axis current error time-delay compensation algorithm.