In this paper, a simplex type dynamic output feedback variable structure control (VSC) for the stabilization of a nonminimum phase open-loop unstable MBC500 magnetic bearing system is presented. An observer type sliding mode controller is designed for the unstable nonminimum phase system. The performance of the designed sliding mode controller is compared with those of a conventional controller, a controller designed based on analytical interpolation approach, and a fuzzy logic controller (FLC). Simulation results shown that the designed observer type sliding mode controller has superior performance than the other control approaches as it provides the best transient and steady-state responses with less control efforts.