Teams of Autonomous Underwater Vehicles(AUVs) can extend the range and/or reliability of any underwater mission and are finding newer applications everyday. In this paper, we propose and analyze the performance of a leader-follower formation control algorithm based on state estimation. The controller estimates the next desired position of each follower robot from the previous and current positions of the leader and follower robots and drives each follower robot into the desired trajectory. This paper investigates the capability of this algorithm in complex formations and takes into account the dynamics of leader and follower robots. Dynamic formation changes en route is also analyzed. A brief description of the experimental setup for the real time testing of the system is provided. © 2013 ACM.