In this work, a nonlinear output feedback control algorithm is proposed, in the spirit of model-state feedback control. The structure provides state estimates using a process model, the measured output, and the residual between the model output and the measured output. These estimates will track the process states at a rate determined by a set of tunable parameters. An algebraic transformation of the state estimates is incorporated in the control structure to ensure that the input/output gain of the observer matches the model upon which the static state feedback control law is based. The transformed states are then used in the control law. This leads to a controller of minimal order possessing integral action. The control structure is shown to have the same properties as the standard model-state feedback structure. The resulting algorithm is a two-degree of freedom control law, in the sense that the control action is not a function of the error only, but the output and the set point are processed in different ways. Finally, a simulation example using an exothermic CSTR operating at an open-loop unstable steady state is used to demonstrate the closed-loop performance of the proposed method. (c) 2005 Elsevier Ltd. All rights reserved.