In this study, an Unscented Kalman Filter (UKF) algorithm is designed for estimating the attitude of a picosatellite and the in-orbit external disturbance torques. The estimation vector is formed by the satellite's attitude, angular rates, and the unknown constant components of the external disturbance torques acting on the satellite. The gravity gradient torque, residual magnetic moment, sun radiation pressure and aerodynamic drag are all included in the estimated external disturbance torque vector. The satellite has magnetometers and gyros onboard as the attitude sensors. Because of the inherent nonlinear dynamics and the nonlinear measurement model, the UKF, which is a nonlinear version of the Kalman Filter, is selected as the filter algorithm. Performance of the proposed algorithm is demonstrated via simulations for a cube pico-satellite and the results are analyzed for different scenarios.