In this paper, the problem of the observer-based control for neutral systems with mixed time-varying delay and nonlinear perturbations is investigated. By using a class of novel augmented Lyapunov-Krasovskii functionals, delay dependent stability criteria are proposed to guarantee the stability of the observer-based control systems. In terms of linear matrix inequality techniques, the observer design and maximum allowable delay bound of neutral systems can be obtained. Finally, a numerical example is provided to illustrate the effectiveness of the proposed approach.