Existing online parameter identification methods of permanent magnet synchronous motors (PMSMs) are generally based on the voltage equations, the precision of which is affected by the cross coupling and magnetic saturation effects. In order to deal with this issue, a virtual-rotary-axis high-frequency signal injection (VHFSI) based online parameter identification method is proposed in this paper, where the cross coupling and magnetic saturation effects on the traditional d-q axis model are analyzed. On this basis, an optimized voltage model under the composite magnetic field rotary axis is introduced. In the proposed method, the cross-coupling angle and the d-q axis inductances can be identified by injecting the high-frequency signal into the constructed virtual rotary axis. In addition, the complex Simpson integral algorithm is adopted to obtain the information of the incremental and apparent inductances. Finally, the permanent magnet flux linkage can be estimated based on the composite magnetic field rotary axis voltage equations. The effectiveness and feasibility of the proposed method are verified by the experiments on a 2.2-kW PMSM drive.