An analytical investigation of a half-car model including passenger dynamics, subjected to random road disturbances is performed, and the advantage of active over conventional passive suspension systems are examined. Two different performance indices for optimal controller design are proposed. The performance index is a quantification of both ride comfort and road handling. Due to practical limitations, all the states required for the state-feedback controller are not measurable, and thus must be estimated with an observer. Stochastic inputs are applied to simulate realistic road surface conditions, and statistical comparisons between passive system and the two controllers, with and without state estimator, are carried out to gain a clearer insight into the performance of the controllers.The simulation results demonstrate that an optimal observer- based controller, when including passenger acceleration in the performance index, retains both excellent ride comfort and road handling characteristics.