The reliability of permanent magnet synchronous motor (PMSM) systems is very important in high-precision industrial drives. However, disturbance or sensor fault may cause the performance degradation of the system. This paper presents an improved sliding-mode-observer (SMO)-based equivalent-input-disturbance (EID) approach for the rejection of faults in current measurement circuits of a PMSM drive. A system model, which contains faults in current measurement circuits, is first constructed by using EIDs in control input circuits. Then, an improved SMO is designed to estimate the equivalent-input-faults. The effect of the faults on the system is rejected based on the EID theory. Moreover, the global stability and convergence analysis is also provided. Experiments and comparisons demonstrate the effectiveness of the method.