An output regulation problem can be converted into a stabilization problem in a systematic framework, thanks to an appropriately designed internal model. However, the successful construction of an internal model (IM) relies on the observability condition of a steady-state generator (SSG). In the literature, the observability condition is restricted to linear or linearized SSGs. This paper introduces a novel observability condition for nonlinear SSGs. Nonlinear observability leads to an effective combination of the internal model principle and the certainty equivalence principle for a more general class of systems. (C) 2010 Elsevier Ltd. All rights reserved.