In this paper, the Takagi-Sugeno (T-S) fuzzy observer is proposed to estimate the relative velocity of magnetorheological (MR) damper. MR damper has highly nonlinear dynamics therefore the linear observer design method cannot be adopted. Therefore, T-S modeling technique such as sector nonlinearity is used to design T-S fuzzy model. The T-S model is developed from the experimental dataset. This paper uses two MR damper models. First, the phenomenological model is used as a plant. This model is used to build the damper force for vehicle simulator Carsim. Next, the bouc-wen model is used to design T-S fuzzy observer. This paper proposes T-S fuzzy observer which has unmeasured premise variables. To verify the stability of this observer, Lyapunov stability theorem is used. The proposed observer is verified to vehicle simulator Carsim and Matlab/Simulink. Consequently, this paper proposed the relative velocity estimator which has robustness to unknown road input.