Demagnetization of permanent magnets (PM) used in synchronous motors (SM) can occur due to a combination of thermal, electrical, and/or environmental operating stresses. Since PM demagnetization results in degradation of motor performance, efficiency, and reliability, it is important to monitor the quality of PMs regularly. However, there are many limitations to the off-line and on-line methods currently used for magnet quality assessment. In this paper, a new inverter-embedded technique for automated monitoring of magnet quality for permanent magnet synchronous motors (PMSM) that overcomes the limitations of existing techniques is proposed. The main concept is to use the inverter to perform a standstill test whenever the motor is stopped to detect local or uniform PM demagnetization. The machine is excited with a pulsating field at different angular positions, and the change in the current peaks caused by the change in the degree of magnetic saturation due to demagnetization is observed. An experimental study on a 10hp PMSM verifies that local and uniform PM demagnetization can be detected with high sensitivity.