This paper addresses the problem of controlling linear systems with both sensors and actuators subject to saturation. Supposing that only the output of the linear plant is measurable, the synthesis of stabilizing output feedback dynamic controllers is considered. It is shown that, in this case, the closed-loop system presents a nested saturation term. Therefore, based on the use of some generalized sector conditions and appropriate variable changes, synthesis conditions in a "quasi"-LMI form are stated in both regional (local) as well as global contexts. Concerning the regional results, an LMI-based optimization problem for computing a controller in order to enlarge the region of attraction of the closed-loop system is proposed.