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This paper presents an algorithm for dynamic state estimation of a power system, utilizing the concept of sliding surface for the enhancement of fuzzy control to improve the estimation performance. In this proposed method, with the aid of fuzzy theory, the uncertainty of state estimation can be solved more effectively. In addition, different from the traditional fuzzy control design, the sliding mode control is embedded into this scheme that combines the error and the rate of error as an integrated input variable. With the estimator design, the number of fuzzy rules will be decreased. The computation time can be also effectively reduced. This proposed method has been applied to test systems and the results are compared with other published techniques.