A stability control system based on direct yaw moment control is proposed to improve the stability of wheel-drive electric vehicles. For the chattering problem of sliding mode controller, a stability controller based on fuzzy sliding mode control is established first. And then, as the sideslip angle is difficult to measure, a nonlinear sliding mode observer with simple structure and fast calculation is designed. Considering the online simulation time and practical constraints, an equal proportion allocation controller is proposed to distribute the driving/braking torque on each wheel. At last the performance of the designed integrated controller is demonstrated through the co-simulation of MATLAB/Simulink and Carsim. The result reveals that the controller can improve the stability of vehicle effectively with smoother control output.