The flux and torque hysteresis bands are the only gains to be adjusted in Direct Torque Control (DTC) of induction motor. The torque ripple and harmonic loss of motor and switching loss of inverter greatly influence them. Hence, these variables must be observed in the control process to maximize performance of the system. In this paper, the effects of flux and torque hysteresis bands and the value of reference stator flux on inverter switching loss, harmonic loss, and torque ripple of induction motor are investigated. In order to find their optimum values, a cost function consisting motor harmonic losses, torque ripples, and inverter switching losses is defined. Minimizing this cost function leads to the optimum value of the hysteresis bands of torque and flux controllers. To validate the proposed work a simulation work is carried out and results are presented.