This paper presents a new approach to design excitation controller for power systems to enhance small-signal stability. Partial feedback linearization scheme is used to design the controller for a linearized power system model which transforms a part of this model into a new system through linear coordinate transformation. In this paper, the excitation control law as a function of state variables is determined from the dynamics of the partly transformed new system provided that the controller stabilizes the remaining dynamics of the system which are not transformed through feedback linearization. The stability of the remaining dynamics is also discussed in this paper. Since the proposed control scheme uses state variables as feedback, it is analogous to a linear quadratic regulator (LQR) based excitation controller. Therefore, the performance of the proposed scheme is evaluated on a single machine infinite bus (SMIB) system and compared to that of an LQR controller.