A system and method for controlling an IPM synchronous machine in a vehicle that calculates an operating trajectory of the machine on-line. The system defines three operating ranges of the machine based on voltage magnitude, where a first operating range is controlled by a current limit of the machine and second and third operating regions are controlled by a voltage limit of the machine. The system calculates d- and q-axis current reference signals in the reference rotor frame for each of the three regions. The system determines which set of current reference signals will be used to control the machine based on the operating region. The third operating region is used during over-modulation of the machine.