This paper presents the design of a genetic algorithm (GA) based full order state observer for a compressor system. The observer measures the compressor system parameters and computes the difference between the measured output and the setpoint, which is used as feedback to the active surge controller. The proposed control structure with a GA tuned compressor characteristic is required to minimize system oscillations and energy losses induced by the piston actuation gas recycling technique. The design method for GA based full order observer begins with a state observer modelling, observer error estimation based on the magnitude of fluid friction and mechanical effects on measured parameters. The aim of the controller is to regulate the compressor driver speed such that the measured output achieves its required set point. In order to achieve a maximum compressor operating capacity, the compressor characteristics were optimized using GA, where the mass flow was maximized to improve the compressor efficiency. Simulations were carried out, and results showed the viability of GA based full order state observer compared with the piston actuation recycle method to control active surge in centrifugal compressor systems.