This paper studies the dynamic irreversible demagnetization characteristics of an interior permanent magnet (PM) brushless DC motor with a stator turn fault. A new algorithm, which is a finite element method (FEM) combined with a line voltage equation of the motor, is developed to analyze irreversible demagnetization under dynamic and transient states and considers a stator turn fault. The input current, circulating current, magnetic distribution characteristics, and operating property of the PM, including the irreversible demagnetization in the fault state, are analyzed using this algorithm by considering the magnetic saturation effect. The feasibility of the proposed method confirmed from the analysis results is verified via an experiment. Through this fault analysis, we can accurately check the fault phenomena of a PM motor against the demagnetization fault for fault prevention.