We consider general mechanical systems and establish a necessary and sufficient condition for the existence of a suitable change in the generalized momentum coordinates such that the new dynamics become linear in the transformed momenta. The class of systems which can be (partially) linearized by the proposed approach is characterized by (the solvability of) a set of partial differential equations and is shown to be larger than the class reported in all the previous works on linearization. We employ this linearization procedure to design an observer for mechanical systems where, we first (partially) linearize the system to make it affine in the new momenta and then construct a globally exponentially stable reduced order observer (which esti...