This paper investigates the problem of state observer design for a class of nonlinear uncertain dynamical systems with interval time-varying delay and the one-sided Lipschitz condition. By constructing the novel Lyapunov-Krasovskii functional while utilizing the free-weighting matrices approach, the one-sided Lipschitz condition and the quadratic inner-bounded condition, novel sufficient conditions, which guarantee the observer error converge asymptotically to zero, are established for a class of nonlinear dynamical systems with interval time-varying delay in terms of the linear matrix inequalities. The computing method for observer gain matrix is given. Finally, two examples illustrate the effectiveness of the proposed method. Copyright (C) 2016 John Wiley & Sons, Ltd.