The objective of the present work was to develop a method for identifying physically plausible finite element system models of airframe structures from test data. The assumed models were based on linear elastic behavior with general (nonproportional) damping. Physical plausibility of the identified system matrices was insured by restricting the identification process to designated physical parameters only and not simply to the elements of the system matrices themselves. For example, in a large finite element model the identified parameters might be restricted to the moduli for each of the different materials used in the structure. In the case of damping, a restricted set of damping values might be assigned to finite elements based on the material type and on the fabrication processes used. In this case, different damping values might be associated with riveted, bolted and bonded elements. The method itself is developed first, and several approaches are outlined for computing the identified parameter values. The method is applied first to a simple structure for which the 'measured' response is actually synthesized from an assumed model. Both stiffness and damping parameter values are accurately identified. The true test, however, is the application to a full-scale airframe structure. In this case, a NASTRAN model and actual measured modal parameters formed the basis for the identification of a restricted set of physically plausible stiffness and damping parameters.