Yaw stability is an important consideration for the vehicle directional stability and handling behavior during emergency maneuvers. In order to maintain the desired path of the vehicle, in presence of disturbances due to cross wind, different road conditions, and tire deflections, a fuzzy logic based yaw stability controller is proposed in this paper. Proposed control system receives yaw rate error, steering angle given by the driver, and side slip angle as inputs, for calculating the additional steering angle as output, for maintaining the yaw stability of the vehicle. As the side slip angle cannot be measured directly in a vehicle, it was estimated using a model based Kalman observer. A two-degrees-of-freedom vehicle model is considered in the present work. The effect of disturbance on yaw rate and yaw rate error of the vehicle is simulated for sinusoidal, step maneuver and compared with the existing fuzzy control system which uses two inputs such as steering angle and yaw rate. The simulation results show better performance of the proposed fuzzy based yaw controller as compared with existing control system. Proposed fuzzy based yaw stability controller can be implemented in steer-by-wire system for an active front steering of a road vehicle.