In this work, a sliding-mode observer is developed for estimating unavoidable frictions and undesired disturbance in motion systems. The estimated parameters are then feedback for compensation to achieve precise control. With proper observability analysis performed by using Lie derivative method, the design of observer is based on the underlying nonlinear system with LuGre friction Model. While maintaining the stability of the observer, we choose the observer gains to make the system a dissipative one. As a conclusion in the last section, the proposed method is applied to a linear-motordriven motion system. The experimental results show that the tracking and positioning performance with the proposed friction compensation method are smaller than those of the disturbance observer (DOB) compensation or without friction compensation.