This paper proposes an observer-based output tracking control via virtual desired reference model for a class of nonlinear systems with time-varying delay and disturbance. First, the Takagi–Sugeno fuzzy model represents the nonlinear system with time-varying delay and disturbance. Then we design an observer to estimate immeasurable states and controller to drive the error between estimated state and virtual desired variables (VDVs) to zero such that the overall control output tracking system has H∞ control performance. Using Lyapunov–Krasovskii functional, we derive sufficient conditions for stability. The advantages of the proposed output control system are (i) systematic approach to derive VDVs for controller design; (ii) relaxes need for real reference model; (iii) drops need for information of equilibrium; (iv) relaxed condition is provided via three-step procedure to find observer and controller gain. We carry out simulation using a continuous stirred tank reactor system where the effectiveness of the proposed controller is demonstrated by satisfactory numerical results.