Abstract: A method and apparatus for determining lateral velocity of a vehicle (10) uses a controller (16) having a lateral velocity estimator (18) therein. A vehicle speed determination circuit (20) is used to determine the vehicle speed which is coupled to the controller (16). A yaw rate sensor (26) is used to generate a yaw rate signal, a lateral acceleration signal (28) is used to generate a lateral acceleration signal, and a roll angle sensor (30) is used to generate a roll angle signal that are each coupled to controller (16). The controller (16) measures an unbiased lateral velocity derivative and determines a fictitious lateral velocity estimation using the unbiased lateral velocity derivative. Using the fictitious error to drive a model based adaptive observer, an accurate lateral velocity determination may he made in spite of model uncertainties and measurement noise.