This paper addresses the problem of optimal selection of the flux reference in induction machines. The results are based on a standard differential equation model of the induction machine and give the value of the flux reference which maximizes the torque at constant speed subject to voltage and current limits. Both the motor and generator modes are considered. The formulas are useful for the real-time programming of digital controllers designed to achieve maximum performance of AC drives at high speeds. Experimental results are given to validate the analysis and demonstrate the usefulness of the optimal flux reference in high-performance servo applications.