The paper proposes a novel approach based on a current space vector derived from measured stator currents to diagnose speed and current sensor failures in the field-oriented control of induction motor drives. A comparison algorithm between the reference and measured rotor speed is used to detect the speed sensor faults. A counter is added to eliminate the influence of the encoder noise in the diagnosis method. In this approach, estimated quantities are not used in the proposed speed sensor fault diagnosis strategy, which increases the independence between the diagnosis stages in the fault-tolerant control (FTC) method. Moreover, in order to discriminate between the speed sensor faults and the current sensor faults, a new approach combining the current space vector and a delay function is proposed to reliably determine the current sensor failures. The MATLAB-Simulink software was used to verify the idea of the proposed method. Practical experiments with an induction motor drive controlled by DSP TMS320F28335 were performed to demonstrate the feasibility of this method in practice. The simulation and experimental results prove the effectiveness of the proposed diagnosis method for induction motor drives.