Online estimation of rotor resistance is essential for high performance vector controlled drives. In this paper, a novel modified neural algorithm has been identified for the online estimation of rotor resistance. Neural based estimators are now receiving active consideration as they have a number of advantages over conventional techniques. The training algorithm of the neural network determines its learning speed, stability, weight convergence, accuracy of estimation, speed of tracking and ease of implementation. In this paper, the neural estimator has been studied with conventional and proposed learning algorithms. The sensitivity of the rotor resistance change has been tested for a wide range of variation from −50% to +50% on the stability of the drive system with and without estimator. It is quiet appealing to settle with optimal estimation time and error for the viable realization. The study is conducted extensively for estimation and tracking. The proposed learning algorithm is found to exhibit good estimation and tracking capabilities. Besides, it reduces computational complexity and, hence, more feasible for practical digital implementation. © 2014, Higher Education Press and Springer-Verlag Berlin Heidelberg.