A novel observer design methodology for linear time-invariant systems named the dynamic observer is presented. Efficient and plausible design algorithms are also provided. The dynamic observer is an extension of the usual static observer. The concept of the dynamic observer enlarges the capacity of observer design so much that well-developed advanced linear controller design techniques can be utilized to design observers. Both the dynamic observers in the form of standard and Luenburger types are considered. The essential characteristics of the dynamic observer to be qualified as an effective observer design scheme are addressed.