This paper presents a review of the state of the art of power electronics technology in both industrial and traction drive application. Key development trends include the dominance of AC adjustable-speed drives in new applications, with the squirrel-cage induction machine as the preferred machine in most cases. Particularly striking has been the rapid ascendance of the insulated-gate bipolar transistor (IGBT) as the predominant power switch in both industrial and traction applications ranging from fractional kilowatts to multimegawatts. Key current issues such as industrial drive input power quality and the effects of fast IGBT switching transients on the machines and electromagnetic interference (EMI) production are reviewed. Developments in electric traction for both rail and road vehicles are discussed, including the increasing modularity of new traction inverters in all sizes and the market introduction of new hybrid vehicles using advanced power electronics. The paper concludes with a discussion of expected future trends in power electronics technology that will likely expand the markets for industrial and traction drives during coming years.