This paper presents a method for using lateral tire force sensors to estimate vehicle sideslip angle and to improve vehicle stability of in-wheel-motor-driven electric vehicles (IWM-EVs). Considering that the vehicle motion is governed by tire forces, lateral tire force measurements give practical benefits in estimation and motion control. To estimate the vehicle sideslip angle, a state observer derived from the extended-Kalman-filtering (EKF) method is proposed and evaluated through field tests on an experimental IWM-EV. Experimental results show the ability of a proposed observer to provide accurate estimation. Moreover, using the estimated sideslip angle and tire cornering stiffness, the vehicle stability control system, making best use of the advantages of IMW-EVs with a steer-by-wire system, is proposed. Computer simulation using Matlab/Simulink-Carsim and experiments are carried out to demonstrate the effectiveness of the proposed stability control system. Practical application of lateral tire force sensors to vehicle control systems is discussed for future personal electric vehicles.