A novel band adaptation algorithm for a three level torque hysteresis comparator for direct torque control (DTC) of an induction motor (IM) is presented in this paper. The hysteresis band adaptation algorithm is developed based on the slope of the estimated torque of the motor. Therefore, it does not need any extra sensor for the torque. The proposed hysteresis comparator reduces both the switching frequency of the inverter and torque ripples of the IM. Thus, it reduces the switching losses and hence improves the efficiency of the drive system. As it reduces the torque ripple, the vibration and noise produced by the motor is reduced. These factors prolong the motor life. The effectiveness of the proposed scheme is evaluated in both simulation and experiment. The results show better torque, flux linkage and stator current responses of the proposed drive as compared to the conventional three level hysteresis based DTC scheme.