A nonlinear state observer-based controller for the twin rotor control system (TRCS) with actuator saturation is developed in this paper. The TRCS exemplifies a higher order multiple-input-multiple-output (MIMO) system having nonlinear dynamics with significant cross couplings. A nonlinear local state observer for TRCS is implemented by coordinate transformation that transforms the plant model in an approximate normal form. On the basis of proposed observer, a feedback controller for TRCS is implemented in real-time. To tackle the external disturbances and friction on the rotor shaft, a nonlinear disturbance and friction observer (NDFO) has been employed. To take into account control input within practical range, a compensator using Chebyshev neural network (CNN) is augmented to the proposed control scheme. The simulation and experimental results are highlight that the controlled response has fast convergence, high degree of tracking with small errors, bounded control effort under the effect of friction and disturbance.