If a state observer does not exist, it is possible to design a functional o
bserver. principally, this is also true for systems with unknown inputs (te
rmed as disturbances). Necessary and sufficient conditions for the existenc
e of disturbance decoupled functional observers for linear time-invariant s
ystems are provided. A method for designing such observers is given. Analys
is and design are based on a matrix pencil approach. The design can also he
used to obtain functional observers for descriptor systems with or without
unknown inputs.