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This study was carried out to explore the exponential stability and controller design of networked control system (NCS) with time-varying delays and the dropped out packets. A networked control system model of dynamical output feedback with time- varying delays and data packet dropout was established between the sensor and controller, the controller and actuator. Based on the theory of asynchronous dynamical systems, the principle of Lyapunov stability and the method of linear matrix inequality, the negative semi-definite matrix conditions for exponential stability and the controller design of NCS were presented in this paper. Furthermore, numerical examples of the negative semi-definite matrix conditions were given, which proved that the negative semi-definite matrix conditions obtained were feasible.