The paper deals with modeling, simulation and analysis of speed observer for induction drive. Mathematical model of observer is presented and its computer model is elaborated. Speed measurement results are compared with those obtained during simulations with induction motor model. Development and implementation of speed observer requires measurement of motor current and supply voltage. Simulated values of current and voltage are used in the proposed observer model instead of the real ones. Model of induction motor is developed on the basis of motor equations in stationary reference frame. Model of observer relies on nonlinear differential equations, describing performance of induction motor, additionally making use of the space-vector theory. The speed observer developed by means of direct synthesis from state equations is robust with respect to parameter and load variations.