Variable structure control with sliding mode can provide good control performance and excellent robustness. Unfortunately, the chattering phenomenon investigated due to discontinuous switching gain restricting their applications. In this paper, a chattering free improved variable structure control (IVSC) for a class of mismatched uncertain interconnected systems with an unknown time-varying delay is proposed. A sliding function is first established to eliminate the reaching phase in traditional variable structure control (TVSC). Next, a new reduced-order sliding mode estimator (ROSME) without time-varying delay is constructed to estimate all unmeasurable state variables of plants. Then, based on the Moore-Penrose inverse approach, a decentralized single-phase robustness sliding mode controller (DSPRSMC) is synthesized, which is independent of time delays. A DSPRSMC solves a complex interconnection problem with an unknown time-varying delay term and drives the system’s trajectories onto a switching surface from the initial time instance. Particularly, by applying the well-known Barbalat’s lemma, the chattering phenomenon in control input is alleviated. Moreover, a sufficient condition is established by using an appropriate Lyapunov theory and linear matrix inequality (LMI) method such that a sliding mode dynamics is asymptotically stable from the beginning time. Finally, a developed method is validated by numerical example with computer simulations.