To eliminate the chattering problem of the traditional sliding mode observer in the rotor position and speed estimation of a permanent magnet synchronous motor, we propose a vector control method for permanent magnet synchronous motors on the basis of an improved sliding mode observer. By improving the traditional sliding mode observer, we design a full-order sliding mode observer that eliminates the need for a low-pass filter that traditional sliding mode observers need to increase before rotor angle and speed estimation. To eliminate the chattering problem, we use the sigmoid function as a switching function in the improved sliding mode observer, which reduces chatter effectively. According to the relationship between the speed and the counter electromotive force, we introduce the fuzzy control, take the speed and the rate of change of the speed as the control variables, and take the sliding mode gain as the output. Thus, the control signal is softened and the chattering is reduced. Rotor angle and rotation speed use an improved phase-locked loop. Simulation results verify the effectiveness of the improved observer, which reduces flutter by 54.75% compared with the traditional sliding observer.