In this paper, a speed-sensorless direct torque control (DTC) drive for induction motors (IMs) fed by three-level neutral-point clamped (NPC) inverter has been investigated. The main objective of the study is to solve two different problems in DTC drive with three-level NPC inverter. First, the conventional switching table fails to consider some limitations caused by the topology of NPC inverter. As a solution to this problem, a new switching method based on simplified three-level space-vector modulation (SVM) technique has been developed by fulfilling both neutral-point potential balance and soft commutation requirements needed for three-level NPC inverters. Other problem is to make accurate estimates, especially in very low and zero speed operation. To address this issue, an extended Kalman filter (EKF)-based observer has been utilized for the estimation of rotor speed, load torque, and flux. The estimated load torque is used to improve the response of speed estimation in both transient and steady states. The stator resistance has also been estimated simultaneously to make more robust and reliable flux estimation. The proposed drive system has been tested under some challenging conditions and verified by the simulation results.