The inter-turn short-circuit (ITSC) fault of stator winding is one of the most common faults of permanent magnet synchronous motor (PMSM). A large current will be generated in the shorted portion of the winding when the fault occurs, which will pose a great threat to the safe operation of PMSM. In order to diagnose the ITSC fault, the effect of ITSC fault on the stator current of PMSM is analyzed. The stator currents of PMSM with different ITSC faults are obtained by finite element simulation and experimental measurements. And the effect of ITSC fault on stator current of PMSM is analyzed by current imbalance, negative-sequence current, and wavelet energy spectrum. The analysis results show that with the increase of short-circuited turns and the decrease of contact resistance, the current imbalance, negative-sequence current, and the energy gradient of D1 in wavelet energy spectrum increase. Thus, the increase of these three indicators can be used as the basis for diagnosing the ITSC fault.