This paper presents a method to measure the velocity of permanent magnet synchronous motors (PMSMs) by sensing the external stray magnetic field (SMF) outside the stator surface. First, a magnetic circuit model of PMSM was developed to analyze the distribution of SMF. The key is to sense the SMF by a magnetic sensor and extract the frequency through a zero-crossing comparison to obtain the velocity. Then, the proposed method was validated by the finite-element-method (FEM). Moreover, a 5.5 kW three-phase PMSM testbed was built up for experimental verification. A triaxial tunneling magnetoresistive (TMR) sensor was utilized to sense the SMF in the testbed. The experimental results demonstrate that the measurement accuracy is less than ±0.15% in the range from 100 rpm to 1000 rpm. Thus, it verifies the proposed methodology can provide a cost-effective and high-accuracy alternative to the velocity measurement for PMSMs.