This paper proposes a square-wave operation of permanent magnet synchronous motor drive system based on direct torque control. It is important to operate in the overmodulation region to maximize the motor output power. In the proposed system, the transition from the PWM drive to the square-wave drive is achieved by comparing the reference values of the stator flux-linkage. The reference values are calculated by the control laws of the maximum torque per ampere and the flux weakening in the M-T frame, which is a reference frame synchronized with the stator flux-linkage vector. Hence, the voltage and current limitations can be achieved by simple mathematical equations. In addition, the proposed system also includes amplitude compensation for an overmodulation PWM drive, armature voltage estimation for a square-wave drive. The effectiveness of the proposed system is experimentally demonstrated.