This paper presents a torque error compensation algorithm for a surface mounted permanent magnet synchronous machine (SPMSM) through real time permanent magnet (PM) flux linkage estimation at various temperature conditions from medium to rated speed. As known, the PM flux linkage in SPMSMs varies with the thermal conditions. Since a maximum torque per ampere look up table, a control method used for copper loss minimization, is developed based on estimated PM flux linkage, variation of PM flux linkage results in undesired torque development of SPMSM drives. In this paper, PM flux linkage is estimated through a stator flux linkage observer and the torque error is compensated in real time using the estimated PM flux linkage. In this paper, the proposed torque error compensation algorithm is verified in simulation and experiment.