This paper presents a compensation algorithm for position error due to an amplitude imbalance between resolver output signals. Resolvers are typically used to obtain absolute position information for motor drive systems in severe environments. Position error is caused by an amplitude imbalance of the resolver output signals. As a result, the d- and q-axis currents of synchronous reference frame have periodic ripples in the stator fundamental frequency in permanent magnet synchronous motor (PMSM) drive systems. Therefore, this paper proposes a compensation algorithm to reduce the position error generated by the amplitude imbalance. The proposed method does not require any additional hardware, and reduces computation time with a simple integral operation according to rotor position. In addition, the position error can be directly compensated for by the estimated position error. The effectiveness of the proposed compensation algorithm is verified through several simulations and experiments.