This study proposes a novel permanent magnet synchronous motor (PMSM) driven system based on isolated shootthrough Z-source inverter (IST-ZSI). The IST-ZSI is utilised to replace the traditional Z-source inverter. Compared with the conventional Z-source inverter-based PMSM drive system, the new drive system can not only solve the coupling of the boost factor and modulation but also provide a large regulation range of the output voltage. For the PMSM drive system, a variable damping injection controller is proposed via the passivity-based control and maximum torque per ampere control principle. Then, the load torque observer is designed to improve the stability of the PMSM system with uncertain load torque. The simulation and experimental results show that the variable damping injection control has satisfactory dynamic and static control performance.