This paper investigates the online fault detection (FD) of the inter-turn short-circuit (ITSC) fault in direct torque control (DTC)-driven induction motors (IMs). We conducted the investigations of harmonic, inter-harmonic, and sub-harmonic contents for FD purposes. The harmonics in the flux leakage spectrum appear as a result of diverse causes including stator fault, DTC reaction to the fault, switching activities, and core saturation effect. Physics-based co-simulation was held through the coupling between a finite-element model (FEM) of the faulty IM and the circuit simulation of DTC. Its advantages are: 1) the IM harmonic contents including stator slots, rotor slots, saturation, switching activity, and fault are simulated and 2) dangerous experimentations of a faulty IM can be avoided. Therefore, we can safely study all the characteristics on a faulty IM. We exploited FEM for the verification of the experimental harmonic signatures of the scattered magnetic field. We verified the online FD technique based on the radiated magnetic field’s spectrum through the co-simulation and experimental results. This indicated that the method is able to correctly detect the ITSC faults with 1% severity factor.