High speed remotely operated vehicle (ROV) was used for observing and working in shallow sea. The propeller motor used in the ROV was often filled with oil to fight against the water pressure. Resolver was employed in the propeller motor as the position sensor, which may be easily affected by the running current. To solve this problem, a sliding mode observer based sensorless control strategy with continuous saturation function was proposed, which was used to estimate the motor position and take the place of the resolver. To improve the estimation accuracy, a phase looked loop (PLL) based position estimation method was introduced. In comparison with th traditional sliding mode observer, this algorithm could reduce the chattering. The proposed strategy was proved by simulations and experiments.