This paper is concerned with the problem of observer-based H-infinity fuzzy control design for Takagi-Sugeno (T-S) fuzzy systems with time-delay. The main contribution is that an effective matrix decoupling technique is developed to derive a single-step LMI condition for observer-based H-infinity control design. This overcomes the drawback of two-step LMI approach in the literature. When restricted to delay-free fuzzy systems, the present result is shown less conservative than existing ones. An illustrative example is given to show the effectiveness of our results. (C) 2007 Elsevier Ltd. All rights reserved.