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The lifetime of the stator winding insulation is reduced when operated with PWM inverters, since insulation degradation is accelerated due to increased thermal and electrical stresses on the motor. This paper focuses on a new approach for monitoring the condition of the stator insulation for failure-prone inverter-fed machines. The main concept of the proposed technique is to apply a variable frequency AC test voltage to the stator insulation using the inverter, to perform standard off-line insulation tests whenever the motor is not operating. This allows the stator insulation to be tested more frequently compared to off-line tests performed once every 3-6 yrs. during periodic maintenance. A method for testing the insulation with minimal modifications to the inverter circuit is proposed and verified experimentally. The results show that the proposed technique provides a simple low cost solution for detecting stator insulation degradation at an early stage for reliable operation of inverterfed machine systems, since the insulation condition can be monitored frequently. This not only helps prevent forced outages and safety risks due to insulation breakdown, but also helps perform maintenance in an efficient manner since individual motor maintenance can be prioritized and scheduled based on its present condition.