This paper presents a sensor fault resilient control approach for permanent magnet synchronous generator (PMSG) based direct drive wind energy conversion systems (WECSs). The measurement accuracy of WECS quantities, such as generator and grid-side currents, generator speed, and dc link voltage are of paramount importance to ensure reliable and efficient operation of PMSG-based WECSs, since these measurements are essential to derive control actions for the power electronic interfaces in the WECSs. Erroneous measurements of WECS quantities due to malfunctioning of corresponding sensors can adversely affect the efficient and reliable operation of the WECS. In this paper, any error in the sensor measurements are considered as sensor fault. The proposed approach comprises a sliding mode observer based state and fault estimation system, a fault mitigation algorithm, and indirect vector control approaches for generator and grid-side voltage source converters (VSCs) to ensure sensor fault resilient operation of WECSs. The efficacy of the proposed approach is validated through rigorous simulation studies carried out on a WECS connected to a practical test distribution system, which clearly demonstrates that the proposed approach is capable of nullifying the impact of erroneous measurements due to sensor malfunctioning and ensure efficient and optimal operation of WECSs.