At present, pulse width modulation (PWM) technique is widely applied in motor drive systems. However, it may cause some unexpected effects: Bearing currents, overvoltage, power losses and unwanted noise. In some industrial cases, LC filters are always equipped in motor drive systems to suppress those unexpected effects. In order to improve the reliability and safety of the drive system, fault diagnostic strategies for power switches should be utilized as other drive systems without LC filters. In the literature, some open-switch diagnostic approaches are based on the observers derived from the mathematical models. However, the models are changed by the LC filters. Therefore, the existing approaches, based on the observers are failed, due to the change of the models. This study proposes an open-switch diagnostic method for permanent magnet synchronous motor (PMSM) drive equipped with LC Filter. The novelty of the proposed method is that the model of the LC filter is considered. Therefore, open-switch faults can be detected and located in the drive systems with LC filters. The switching function model of the drive system is analyzed at first. Then a sliding mode observer (SMO) considering the model of the filter is proposed to estimate the filter voltages and other state variables. Consequently, the faults can be detected and located through the residual errors between the expected and estimated filter voltages. This approach features simplicity. Furthermore, any extra sensors are not necessary. Experimental results on a 750-W PMSM drive system with an LC filter proved the feasibility of the proposed method.