The existence of inverter dead time makes the output voltage and current of inverter be different from its reference voltage and current. Dead time of inverter increases the harmonic of inverter output and makes the output torque of servo motor ripple largely. Especially in the condition of low speed, dead time may cause servo system unstable. The influence of inverter dead time on AC servo system, especially in the condition of low speed, was analyzed. A new on-line dead time delay compensation algorithm was proposed to improve the inverter output performance. The triggers for the inverter switches, additional circuits or off-line experimental measurement are unnecessary. The realization of the algorithm is simple and the harmonics in output waveform are small. The current ripple when the system works at the low frequency is reduced. Simulation and experimental results demonstrate the proposed algorithm is effective and feasible.