This paper presents the design and analysis of a sliding-mode observer for the flux magnitude of the induction machine. The design is done using a modified model of the motor in the rotating reference frame. The inputs of the observer are the voltages and currents in the dq frame, and an estimate of the speed (which is not necessarily accurate). Using a speed estimate allows us to eliminate the speed measurement and yields a sensorless observer. The novelty is that, despite using an inaccurate input speed, the design of the feedback gains allows us to obtain an accurate flux estimate. The sliding mode observer is compared with a similar open-loop flux observer-it is shown that the proposed design is muchmore robust to parameter variations. The theoretical derivations are supported with simulations and experimental waveforms.