This paper presents a nonlinear augmented observer, and it is applied to an underactuated quadrotor aircraft. Not only the proposed augmented observer can estimate the velocity from the position measurement, but also the uncertainties can be obtained. The robustness in time domain and in frequency domain is analyzed, respectively. The merits of the presented augmented observer include its synchronous estimation of velocity and uncertainties, finite-time stability, ease of parameters selection, and sufficient stochastic noise rejection. Moreover, a simple control law based on the augmented observer is designed to stabilize the flight dynamics. Simulation results illustrate the effectiveness of the proposed method.