In this paper, the performance of a single-axis attitude control with pulse-width pulse-frequency (PWPF) modulation is enhanced using a modified proportional-integral-derivative (PID) controller for a rigid satellite with on-off thruster actuators. For this purpose, the well-known observer-based PID approach is utilized. The on-off thruster actuator is modeled with a constant delay followed by a second-order binomial transfer function. The modulator update frequency is limited to 40 Hz as an input to the on-off thruster actuators. In this study, the design criteria of pointing accuracy, overshoot of the attitude response, fuel consumption, and the number of thruster firings are considered for a step external disturbance (with different values). The parameters of the observer-based PID controller are tuned using parametric search method. Simulation results show that the fuel consumption and settling time of the observer-based approach are considerably decreased with respect to those of PID controller with PWPF modulator. Moreover, the overshoot of the observer-based approach is omitted. Finally, the robustness of the observer-based modified PID controller is investigated in presence of uncertainties in satellite moment of inertia and thrust level of on-off actuators.