In this paper, a new nonlinear output feedback controller is proposed for islanded DC microgrids using the partial feedback linearization technique while considering only the output of each component. The proposed controller is designed to ensure the desired common DC-bus voltage which depicts the maintenance of the power balance for the DC microgrid. The structure of DC microgrids includes a solar photovoltaic (PV) unit, a battery energy storage system (BESS), a standby diesel generator, and an aggregated DC load. The implementation of the proposed partial feedback linearizing control scheme requires all state information of DC microgrids which need to be either measured or estimated through observers. Traditionally, it is considered that all states can be measured for which it is essential to use large number of sensors. Here, the common DC-bus voltage which is the output of each component is used as feedback variables for the estimation of state variables using a new nonlinear state observer. The proposed output feedback control scheme is designed based on the dynamical models of all components within a DC microgrid structure. Simulation studies are carried out under different operating conditions in order to evaluate the performance of the proposed nonlinear output feedback controller including some comparisons with an existing sliding mode controller.