AbstractThis article focuses on the adaptive output feedback control problem for a class of uncertain nonlinear systems under unknown actuator and sensor faults. In contrast to existing works, we consider unknown time‐varying discontinues faults and loosen their conservative conditions on nonlinear functions. First, since there is just inaccurate output information is available, an observer based on dynamic gain is conceived to reconstruct state variables that cannot be measured. Second, the dynamic gain is introduced into the design of virtual controller by coordinate transformation, and is employed to construct Lyapunov function to handle unknown parameters. On the other hand, a new global output feedback control algorithm is proposed by utilizing dynamic gain which improves the flexibility of parameters selection on the premise of ensuring stability. Based on the Lyapunov stability theory, the resulting closed‐loop system is proved strictly all signals are global bounded. Finally, a simulation example is presented to illustrate the efficiency of the proposed control algorithm.