A new method for detecting demagnetization faults in axial flux permanent magnet synchronous wind generators is presented in this study. Demagnetization faults occur in the case of total or partial loss of the magnetic properties of one or more permanent magnets of the machine. Fault signatures appearing in the current or voltage signal due to a demagnetization fault can often be confused with those produced by eccentricity faults, making the discrimination between the two types of faults difficult. The proposed methodology is based on the analysis of the instant power spectrum of the generator, combined with an estimator to derive the permanent magnet flux, based on the machine equations. Short-Time Fourier Transform is proposed as the means for spectrum analysis to ensure performance during variations of the generator speed. Results derived from the experimental tests are presented, which show that the proposed methodology is capable of detecting demagnetization faults and distinguishing them from eccentricity ones under a wide variety of operating conditions.