This paper introduces the dynamic 2nd-order Smooth Variable Structure Filter (Dynamic 2nd-order SVSF) method for the purpose of robust state estimation. Thereafter, it presents an application of this method for condition monitoring of an electro-hydrostatic actuator system. The SVSF-type filtering is in general designed based on the sliding mode theory; whereas the sliding mode variable is equal to the innovation (measurement error). In order to formulate the dynamic 2nd-order SVSF, a dynamic sliding mode manifold is defined such that it preserves the first and second order sliding conditions. This causes that the measurement error and its first difference are pushed toward zero until reaching the existence subspace. Hence, this filter benefits from the robustness and chattering suppression properties of the second order sliding mode systems. These help the filter to suppress the undesirable chattering effects without the need for approximation or interpolation that however reduces accuracy and robustness of the SVSF-type filtering. In order to investigate the performance of the dynamic 2nd-order SVSF for state estimation, it applies to an Electro-Hydrostatic Actuator (EHA) system under the normal and uncertain scenarios. Simulation results are then compared with ones obtained by other estimation methods such as the Kalman filter and the 1st-order SVSF method.