Traction speed sensor’s fault can cause the impact of the train, or even loss of traction, seriously affecting the comfort and safety of metro vehicle travelling. Based on the dynamic model of induction motor, the open-loop speed estimation method was deduced, and the pros and cons of open-loop speed identification were analyzed; then a model reference adaptive speed estimation method for fault diagnosis and auto-tolerant control after the speed sensor fault was proposed. The method was validated in Wuxi metro, which could rapid diagnosis the speed sensor fault and realize auto-tolerant control, ensuring the safe and reliable operation of the metro vehicles.