The physical function model has been effectively used for model-based development (MBD) of automobile systems. This research demonstrates a novel application of this modeling method to the state estimation of nonlinear mechanical systems based on the Kalman filtering theory. The physical function model is a block diagram that describes each engineering field by a common rule, which focuses on the energy flow. Compared to traditional modeling approaches, this model has the flexibility to incorporate a wide range of nonlinear characteristics and the know-how accumulated by the manufacturers. Hence, it has a quite high affinity with the industrial world. The purpose of this research is to pioneer a new application of the physical function model beyond simulation analysis. In particular, physical function modeling offers a model of a system with multiple nonlinearities in the form of a time-varying linear state equation. By focusing on this feature, this study applies it to the Kalman filtering theory. The proposed approach is applicable to a wide range of nonlinearities, reduces the calculation load, and considers the background of the current MBD. Finally, verifications using an experimental apparatus, which simplifies an automotive drivetrain with backlash, demonstrate the effectiveness of the proposed approach.