Abstract A new method for designing discrete-time multi-variable predictive controllers is presented. It is based on the ‘predictive state’ model developed directly from the step response of the plant. With the usual state space techniques, the control law with predictive state feedback is derived by using a discrete-time moving horizon optimization. A predictive state observer is then introduced to realize the control law. Some aspects about parameter selection are discussed. The performance of the new design method is demonstrated by some simulation results. Finally, a comparison between the new method and the usual discrete-time optimal control is made to illustrate the characteristic of the predictive control method.