The paper presents the synthesis of a state observer which can be applied to estimation of the current and voltage symmetrical components in a three-phase electrical network. The state observer algorithm is based on the recursive model of the current and voltage generation process in a three-phase power system in which the orthogonal phasors are used as the model state variables. The synthesis of the state observer is shown under the assumption that the higher harmonics as well as the decaying DC offset may be present in the symmetrical component phasors. The state observer presented can be used as the fast current and voltage symmetrical component estimator in digital power protection systems. The calculation example included shows the basic properties of the observer in such an application.