This paper presents the iron loss prediction of rotating electric machines taking account of the vector hysteretic properties of electrical steel sheet. The E&S vector hysteresis model is adopted to describe the vector hysteretic properties of a non-oriented electrical steel sheet, and incorporated into finite element analysis (FEA) for magnetic field analysis and iron loss prediction. A permanent magnet synchronous generator is taken as a numerical model, and the analyzed magnetic field distribution and predicted iron loss by using the proposed method is compared with those from a conventional method which employs an empirical iron loss formula with FEA based on a non-linear B-H curve. Through the comparison the effectiveness of the presented method for the iron loss prediction of the rotating machine is verified.