A multivariable adaptive control algorithm is applied to the axial flux shape control in a pressurized water reactor. This is one of the most challenging control problems in the nuclear field. The reactor model used for computer simulations is a two-point xenon oscillation model based on the nonlinear xenon and iodine balance equations and a one-group, one-dimensional, neutron diffusion equation having nonlinear power reactivity feedback that adequately describes axial oscillations and treats the nonlinearities explicitly. The reactor core is axially divided into two regions, and it is considered that each region has one input and one output and is coupled with the other region. The control parameters are updated on-line with the generalized least-squares method to adjust the varying operating conditions. Therefore, this algorithm is able to treat the varying operating conditions well. Also, this control algorithm exhibits very fast responses due to the step and ramp changes of target axial shape without any residual flux oscillations between the upper and lower halves of the reactor core.