The authors propose a novel decentralised mixed algebraic and dynamic state observation method for multi‐machine power systems with unknown inputs and equipped with phasor measurement units (PMUs). More specifically, they prove that for the third‐order flux‐decay model of a synchronous generator, the local PMU measurements provide enough information to reconstruct algebraically the load angle and quadrature‐axis internal voltage. Due to the algebraic structure, a high numerical efficiency is achieved, which makes the method applicable to large‐scale power systems. Also, they prove that the relative shaft speed can be globally estimated combining a classical immersion and invariance observer with – the recently introduced – dynamic regressor extension and mixing parameter estimator. This adaptive observer ensures global convergence under weak excitation assumptions that are verified in applications. The proposed method neither requires the measurement of exogenous input signals such as the field voltage and the mechanical torque nor the knowledge of mechanical subsystem parameters.