A system for estimating the state of a controlled vehicle's motion has a steering wheel angle sensor, a vehicle speed sensor, a sensor for sensing a first motion variable such as a yaw rate, a sensor for sensing a second motion variable such as a yaw acceleration, and a processing unit such as a microcomputer. In accordance with the sensor output signals, the processing unit produces a condition signal which is in a first signal state when the unit determines that the vehicle is in a steady-state turning motion, and in a second signal state when the unit determines that the vehicle is in a transient state turning motion. The processing unit determines estimated values of the first and second motion variables corresponding to the steering wheel angle and vehicle speed by solving a first predetermined mathematical vehicle model, and further determines an estimated value of a third motion variable such as slip angle or steer angle by solving a second mathematical vehicle model which may be identical to or different from the first model. The processing unit adjusts a value of a vehicle characterizing parameter such as a cornering power of the second model in accordance with the result of comparison between the sensed and estimated values of the first motion variable when the condition signal is in the first state, and in accordance with the result of comparison between the sensed and estimated value of the second motion variable when the condition signal is in the second state.