An induction motor condition monitoring system using industrial wireless sensor networks (IWSNs) with and without on-sensor data processing are described and compared. The prototype system has been implemented and validated on a single phase induction motor in the laboratory. On-sensor data processing is explored to alleviate the contradictions between the higher performance requirements of IWSNs such as higher sample rate and fast transmission rate, and the resource constrained characteristic of IWSNs nodes, such as the limited data rate and battery energy. The experimental results and motor stator current waveforms on different working conditions are given. The test, comparison and analysis about data transmission rate, energy consumption and node lifetime for on-sensor data processing and direct raw data transmission are also presented.