An adaptive nonlinear observer based friction compensation for a special time delayed system is presented in this paper. Considering existing delay, an available Coulomb observer is modified and closed loop system is formed by using a Smith predictor based controller as if the process is delay free. Implemented hierarchical feedback system structure provides two-degree of freedom and controls both velocity and position separately. For this purpose, controller parametrization method is used to extend Smith predictor structure to the position control loop for different types of inputs and disturbance attenuation. Simulation results demonstrate that without requiring much information about friction force, the method can significantly improve the performance of a control system in which it is applied. © 2014 Institute of Control, Robotics and Systems (ICROS).