This paper presents a new rotor position estimation method for brushless DC motors. It is clear that the estimation error of the rotor position provokes the phase shift angle misaligned between the phase current and the back-EMF waveforms, which causes torque ripple in brushless DC motor drives. Such an estimation error can be reduced with the help of the proposed neutral voltage-based estimation method that is structured in the form of a closed loop observer. A neutral voltage appearing during the normal mode of the inverter operation is found to be an observable and controllable measure, which can be dealt with for estimating an exact rotor position. This neutral voltage is obtained from the DC-link current, the switching logic, and the motor speed values. The proposed algorithm, which can be implemented easily by using a single DC-link current and the motor terminal voltage sensors, is verified by simulation and experiment results.