An operational space controller that employs a velocity observer and a friction adaptation law to achieve higher tracking accuracy is presented. Without velocity measurements, the overall observer-controller system can achieve a semi-global asymptotic stability for the position and velocity tracking errors, and position and velocity estimation errors. The estimated friction coefficients can also approach the actual coefficients asymptotically. Experimental results indicate that the proposed adaptive observer-controller is able to achieve higher tracking accuracy than the observer-controller without friction compensation.