This paper presents, a state observer based controller for the twin rotor multiple-input-multiple-output (MIMO) system. The twin rotor MIMO system (TRMS) belongs to a class of nonlinear system having high coupling effect between two propellers, unstable and nonlinear dynamics. A state observer is designed using coordinate change which transforms the TRMS into an approximate normal form. Based on the proposed observer, a feedback linearization controller is designed for TRMS. The control effort is further compensated using a compensator based on Chebyshev neural network (CNN) to ensure good tracking performance and bounded control effort. Finally simulation results are presented to illustrate the effectiveness of the proposed observer based controller.Keywords-Approximate normal form, Chebyshev neural network, nonlinear system, state observer, twin rotor MIMO system.978-1-4673-4505-7/12/$31.00 ©2012 IEEE