AbstractThis article deals with the problem of observer‐based controller (OBC) design for a class of nonlinear systems in the presence of input saturation. The nonlinearities are assumed to satisfy the one‐sided Lipschitz and the quadratically inner‐bounded conditions. Sufficient conditions for the existence of OBC are derived by Lyapunov stability theory. The designed OBC not only ensures the asymptotic stability of the overall closed‐loop system with a domain of attraction as large as possible, but also guarantees the actuator saturation avoidance. This problem is converted into a linear matrix inequality optimization problem by judicious use of Young's relation for straightforward computation of the OBC gains. Finally, the effectiveness of the proposed design method is demonstrated by simulation results.