The design problem of optimal output feedback controller for the linear time-invariant system is investigated with the time-multiplied performance index. Necessary conditions for optimality are derived in the continuous time domain and discrete time domain respectively and extended in the case of PID controller. Also a numerical procedure for designing an optimal observer which minimizes the time-multiplied performance index for a linear time-invariant system is described. It is shown via example that the design method using such a performance index improves the transient response of the system.