This paper develops a position estimation system for a robot moving over a two-dimensional plane with three degrees-of-freedom. The position estimation system is based on an external rotating platform containing a permanent magnet and a monocular camera. The robot is equipped with a two-axes magnetic sensor. The rotation of the external platform is controlled using the monocular camera so as to always point at the robot as it moves over the 2D plane. The radial distance to the robot can then be obtained using a one-degree-of-freedom nonlinear magnetic field model and a nonlinear observer. Extensive experimental results are presented on the performance of the developed system. Results show that the position of the robot can be estimated with sub-mm accuracy over a radial distance range of +/−60 cm from the magnet.