Abstract This article investigates the design of Takagi–Sugeno (TS) fuzzy model‐based observers for nonlinear systems with parametric uncertainties and unknown inputs. To address this challenging problem, two observers are constructed in cascade. Based on the sliding mode technique, the first observer allows to examine a new system whose both state and output equations are subject to uncertainties but without unknown inputs. The second Luenberger‐type observer is designed for the new system where the effects of uncertainties on the estimation error can be canceled. The TS fuzzy observer design is recast as optimization problems under linear matrix inequalities, which can be effectively solved using convex optimization technique. The new cascade observer structure enables a simultaneous estimation of the system states, the unknown inputs and the uncertainties of the original nonlinear system. The effectiveness and advantage of the proposed estimation method is demonstrated via two numerical examples including a nonlinear vehicle application.