This paper presents the design of a signal-injection-based sensorless interior permanent magnet synchronous motor (IPMSM) for a traction drive in hybrid electric vehicles (HEVs). To realize an accurate design, the sensorless safety operation region (SSOR) is introduced to account for the cross-coupling magnetic saturation and harmonics of inductance distributions. The SSOR defines a working point on the maximum torque per ampere trajectory at which the motor can perform sensorless operation with a guaranteed performance in the steady state. The reliability of the SSOR was verified in experiments using a prototype. The influence of the IPM motor geometry on the SSOR was then examined. Under the given dimensional constraints, the design of a 100Nm-10 kW 12-pole, 18-slot IPMSM was optimized to meet the requirements for the target traction drive in an HEV. The validity of the proposed design was verified by using a MATLAB/SIMULINK-based dynamic simulator.