This letter proposes a novel condition monitoring scheme of dc-link capacitors in PWM inverter-fed induction machine drives with front-end diode rectifiers, which is based on the online capacitance estimation scheme. While the motor is operating in the regenerative mode for the estimation process, a regulated ac component is injected into the stator winding, which causes a dc-link voltage ripple at the same frequency. From the ac components of the dc-link voltage and current, the capacitance is estimated with a recursive least squares algorithm. With this method, experimental results have shown that the estimation error of the capacitance is less than 1%, from which the deterioration condition of the capacitors can be diagnosed reliably.