This paper proposes a control method for interior permanent magnet synchronous motor (IPMSM) drive systems with a small DC-link capacitor fed by three-phase diode rectifier. A design with a small film capacitor brings several advantages such as high reliability, long lifespan, and compact size of the system. However, the capacitor causes instability of the system. Therefore, input current of the system is distorted. In order to solve the problem, DC-link shunt compensator (DSC) is proposed. The DSC injects a compensation current to stabilize the system. In addition, the IPMSM is controlled through a direct torque control (DTC) for fast dynamic response and reactive power is controlled to obtain high power factor of the IPMSM drive system. The proposed design and control method of the IPMSM is verified by various simulation results.