Thus far, Kalman filter based attitude estimation algorithms have been used in many space applications. When the issue of pico satellite attitude estimation is taken into consideration, general linear approach to Kalman filter becomes insufficient and Extended Kalman Filters (EKF) are the types of filters, which are designed in order to overrun this problem. However, in case of attitude estimation of a pico satellite via magnetometer data, where the nonlinearity degree of both dynamics and measurement models are high, EKF may give inaccurate results. Unscented Kalman Filter (UKF) that does not require linearization phase and so Jacobians can be preferred instead of EKF in such circumstances. Nonetheless, if the UKF is built with an adaptive manner, such that, faulty measurements do not affect attitude estimation process, accurate estimation results even in case of measurement malfunctions can be guaranteed. In this study an Adaptive Unscented Kalman Filter with multiple fading factors based gain correction is introduced and tested on the attitude estimation system of a pico satellite by the use of simulations.