Induction motors (IMs) are widely used in industrial applications, but harmonic distortion in IM drives can lead to inefficiencies and reduced lifespan. Traditional control strategies and filtering methods have limitations in mitigating lower-order harmonics, particularly the 5th harmonic, which can generate reverse torque and increase overheating risk. Existing solutions often struggle to fully address these issues, especially in high-power applications with dynamic loading conditions. This paper proposes a control strategy to reduce voltage and current harmonics in a Z-source inverter (ZSI)-fed IM drive. The system incorporates an observer-based output feedback robust servomechanism controller, designed using Linear Quadratic Regulator (LQR) and Linear Matrix Inequality (LMI) techniques. It ensures closed-loop stability, precise tracking regulation, and effective disturbance rejection, while also featuring a speed adaptation mechanism for sensorless operation. Simulation results demonstrate significant harmonic mitigation, with the controller achieving 1.01% lower voltage THD and 1.03% lower current THD compared to conventional approaches. This improvement aligns with industry standards and outperforms several existing techniques. The proposed method contributes a comprehensive solution for harmonic mitigation in high-power IM drives, applicable to various industrial applications requiring high-quality power and precise speed control.