State estimation has become an important area of research in the field of process engineering. This is because there are many applications that demand the knowledge of many of the state variables, if not all of them. Among others, the implementation of nonlinear control methods as well as monitoring some relevant process variables can be mentioned. The purpose of this paper is to introduce a nonlinear high gain observer in order to estimate the whole process state variables. Whenever some construction conditions hold, it is possible to obtain estimates that converge asymptotically to the actual values. Moreover, this estimator has robust performance in the presence of model uncertainty and measurement noise. A quantitative analysis is developed to measure the observer robustness. Though the estimated states can be used for many purposes, in this work we aim at using the estimates for output regulation. For this goal, a nonlinear controller based on exact linearization is designed. As a particular application, we consider the open-loop unstable jacketed exothermic chemical reactor. This CSTR is widely recognized as a difficult problem for the purpose of control. In order to achieve the control goal, a simple algorithm lying on exact linearization principle is considered. Finally, computer simulations are developed for showing the performance of the proposed nonlinear observer (NO). The performance of the observer when used for control purpose was also evaluated. (C) 2004 Elsevier Ltd. All rights reserved.