An improved predictive current control (PCC) algorithm with stator current and disturbance observation compensation was proposed. Theoretically, the PCC for the PMSM possesses excellent control performance. However, problems including the discrete sampling delay and the timevarying electromagnetic parameters in the practical system cause serious deterioration in the control quality of the modelbased predictive current controller. A Luenberger state observer was designed to observe stator current and parameter disturbances, which was applied to compensate and improve the conventional deadbeat predictive current controller. The sampling current at the present moment was substituted by the observed stator current at the present moment for the feedback control to compensate the sampling delay. The variation of the electromagnetic parameters during operation caused a mismatch in the model parameters, the effects of which were observed in the form of voltage disturbances and compensated to the output voltage reference of the predictive control. The simulation and experimental results verified the validity of the proposed algorithm.