In this paper, an adaptive input-output feedback linearization controller for induction motors is introduced while the core loss resistance is included in the controller equations. It is assumed that practically core loss and rotor resistances are unknown. The proposed controller includes a nonlinear observer to simultaneously estimate core loss and rotor resistance along with d-q fluxes in the stationary reference frame. After designing the proposed controller and observer, the stability of the closed loop system will be analyzed based on a Lyaponuv function. This analysis along with the simulation results verify the convergence of the estimated rotor and core loss resistance, while the controller tracks the reference flux and torque, and speed.Index Terms--feedback linearization, induction motor nonlinear observer, stator core loss.