This paper proposes the alternative observer and controller design scheme based on T-S fuzzy model. Nonlinear systems are represented by fuzzy models since fuzzy logic systems are universal approximators. In order to estimate the unmeasurable states of a given unknown nonlinear system, T-S fuzzy modeling method is applied to get the dynamics of an observation system. T-S fuzzy system uses the linear combination of the input state variables and the modeling applications of them to various kinds of nonlinear systems can be found. The proposed indirect adaptive fuzzy observer based on T-S fuzzy model can cope with not only unknown states but also unknown parameters. The proposed controller is based on a simple output feedback method. Therefore, it solves the singularity problem, without any additional algorithm, which occurs in the inverse dynamics based on the feedback linearization method. The adaptive fuzzy scheme estimates the parameters and the feedback gain comprising the fuzzy model representing the observation system. In the process of deriving adaptive law, the Lyapunov theory and Lipchitz condition are used. To show the performance of the proposed observer and controller, they are applied to an inverted pendulum on a cart.