This paper proposes an electromagnetic position estimation system suitable for linear actuators. The inexpensive non-contacting position measurement system is composed of an electromagnet on the stationary cylinder and a magnetic sensor on the moving piston rod of the actuator. The current supply to the electromagnet is actively controlled to track a desired current profile based on the instantaneous position estimate. The desired current profile increases monotonically with position to achieve accurate position estimation even for regions with low magnetic sensitivity. A nonlinear observer is designed based on Lyapunov theory to ensure asymptotically stable position estimation and current tracking. The active position system is experimentally validated using a piston-cylinder setup with 20 cm stroke length. Experimental results show that the active position estimation system can achieve 1% measurement accuracy over the entire stroke length while a system with constant current consuming the same average power shows nearly twice the estimation error.