In this paper, an output feedback H∞ controller is proposed for active suspension of an electric vehicle driven by in-wheel motors with actuator faults and time delay. The dynamic damping in-wheel motor driven system, in which the in-wheel motor is designed as a dynamic vibration absorber (DVA), is developed to improve ride quality and isolate the force transmitted to motor bearings. Furthermore, parameters of vehicle suspension and DVA are optimized based on the particle swarm optimization (PSO) to achieve better suspension performance. As some of the states such as the DVA velocity and unsprung mass velocity are difficult to measure, a robust H∞ output feedback controller is developed to deal with the problem of active suspension control with actuator faults and time delay. The proposed controller could guarantee the system's asymptotic stability and H∞ performance, simultaneously satisfying the performance constraints such as road holding, suspension stroke, and actuator limitation. Finally, the effectiveness of the proposed output feedback controllers is demonstrated based on the quarter vehicle suspension model under bump and random road excitations.