This paper proposes a stator flux estimation method for induction motor based on Prescribed Convergence Law algorithm. A stator flux observer is designed and applied for direct torque control (DTC) of induction motor. The observer tracks stator current and its differential with Prescribed Convergence Law algorithm of second order sliding mode in order to estimate rotor flux, and then estimate stator flux using the relationship between stator flux and rotor flux. This paper takes the differential of estimated flux error as disturbance and divides the MIMO (Multiple Input Multiple Output) observer model into two separate SISO (single input single output) systems, which simplifies the stability analysis. The observer is applied to DTC of induction motor and achieves a good control effect. Simulation experiment results validate the proposed method.