Extended Kalman filter (EKF) has been widely applied for sensorless direct torque control (DTC) in induction machines (IMs). One key problem associated with EKF is that the estimator suffers from computational burden and numerical problems resulting from high order mathematical models. To reduce the computational cost, a two-stage extended Kalman filter (TEKF) based solution is presented for closed-loop stator flux, speed, and torque estimation of IM to achieve sensorless DTC-SVM operations in this paper. The novel observer can be similarly derived as the optimal two-stage Kalman filter (TKF) which has been proposed by several researchers. Compared to a straightforward implementation of a conventional EKF, the TEKF estimator can reduce the number of arithmetic operations. Simulation and experimental results verify the performance of the proposed TEKF estimator for DTC of IMs.