This paper presents a study on the algorithm transition from sensored to sensorless control when the position sensor fault of interior permanent magnet synchronous motor (IPMSM) occurs. The determination of threshold values related to the difference between estimated value and actual value is necessary to decide the fault condition of speed and position sensor. This threshold value should be selected by a higher value than the maximum overshoot caused by acceleration or deceleration of motor as well as steady state error. The overshoot values are depend on the gain of speed and position estimator for sensorless control. In this paper, the relation between the overshoot values and estimator gains is studied to define the stable selection of threshold value. The designed estimator gain and threshold value are verified by experimental results in order to obtain the stable algorithm transition.