This paper proposes a design procedure for observer-based controllers of discrete-time switched systems, in the presence of state’s time-delay, nonlinear terms, arbitrary switching signals, and affine parametric uncertainties. The proposed switched observer and the state-feedback controller are designed simultaneously using a set of linear matrix inequalities (LMIs).The stability analysis is performed based on an appropriate Lyapunov–Krasovskii functional with one switched expression, and in the meantime, the sufficient conditions for observer-based stabilization are developed. These conditions are formulated in the form of a feasibility test of a proposed bilinear matrix inequality (BMI) which is a non-convex problem. To make the problem easy to solve, the BMI is transformed into a set of LMIs using the singular value decomposition of output matrices. An important advantage of the proposed method is that the established sufficient conditions depend only on the upper bound of uncertain parameters. Furthermore, in the proposed method, an admissible upper bound for unknown nonlinear terms of the switched system may be calculated using a simple search algorithm. Finally, the efficiency of the proposed controller and the validity of the theoretical results are illustrated through a simulation example.