This paper investigates the distributed containment control problem for multi-agent systems with general linear dynamics under a directed graph. A new observer based on the relative outputs of neighboring agents is developed to estimate the relative states of neighbors which avoid designing the observer for the leaders in the existing literature. A matrix transformation is introduced to eliminate the coupling terms resulting from the simultaneous design of the observer and the controller gains. Then a sufficient condition on the existence of the observer-based controllers is presented in terms of strict linear matrix inequalities. Finally, a simulation example is provided to demonstrate the effectiveness of the proposed design method.