The dynamic behavior of a vehicle is predominantly controlled by the forces and moments generated at the contact patch between the tire and the road surface. As a result, tire characteristics can dramatically change vehicle response, especially during maneuvers that yields the tires to reach to the limits of its adhesion capacity. To assist the driver in such cases and to prevent other possible instability scenarios, various vehicle control systems e.g. anti-lock brakes (ABS), stability controllers (ESP, ESC) or rollover mitigation schemes are introduced, which are generally known as active vehicle safety systems. Based on the above facts, one can easily come to the conclusion that to improve upon the current control algorithms developed for the technology in use; a vehicle control system design requires accurate knowledge of the tire states. This study proposes the use of a smart tire system that can provide information on momentary variation of tire features through the sensor units attached directly on the tire and develops control algorithms based on this information to assure the match-up between tire and controller dynamics. A prototype smart tire system was developed for field testing and for detailed analysis of its potential. Based on the collected prototype data, novel observer and controller schemes were developed to obtain dynamic tire state information and to improve vehicle handling performance. The proposed algorithms were implemented and evaluated using numerical analysis in Matlab/SimulinkR environment. For a more realistic simulation environment, vehicle models were integrated from Mechanical Simulations CarSimR® software suite. / Ph. D.