This paper presents a compensative microstepping based position control with passive nonlinear adaptive observer for permanent magnet stepper motor. Due to the resistance uncertainties, a position error exists in the steady-state, and a ripple of position error appears during operation. The compensative microstepping is proposed to remedy this problem. The nonlinear controller guarantees the desired currents. The passive nonlinear adaptive observer is designed to estimate the phase resistances and the velocity. The closed-loop stability is proven using input to state stability. Simulation results show that the position error in the steady-state is removed by the proposed method if the persistent excitation conditions are satisfied. Furtherm...