The state observer is applied to measure the system state under certainty conditions. High performance closed loop control of a two-phase hybrid stepping motor needs accurate position information, but position sensors are restricted by the resolution, there will be quantization error in the position measurement, and the system dynamic performance is poor. In this paper, an asymptotic observer is proposed for a two-phase hybrid stepping motor, the rotor position is estimated by detecting the terminal voltage of the motor and the winding current, then the observed winding current and rotor position is feedback respectively to the input terminal of current controller and position controller. The simulation results show, compared with position sensor, state observer can improve the control performance of the system.