The 2-D time-stepping finite element method is adopted to systematically analyze the effect of slot opening on motor parameters like electrical leak age reactance, power factor, winding current and air gap flux density of high power surface mount type PMSM which is driven by inverter. Thereby, the effect of slot opening on eddy current loss in permanent magnets is determined. Analysis shows that while the width of slot opening decreases, the leakage reactance increases. Thus the ripple current caused by PWM wave is effectively restrained and the higher harmonic current is effectively filtered. In consequence, the amplitude of the high order harmonic components of air-gap flux density reduces, leading to the decrease of eddy current loss in permanent magnets. Meanwhile, through the temperature-rise test of permanent magnets of two different PMSMs with different slot openings, the validity of this analysis method and results are proved.