This paper proposes a new stochastic model updating method to update structural models based on the improved cross-model cross-mode (ICMCM) technique. This new method combines the stochastic hybrid perturbation-Galerkin method with the ICMCM method to solve the model updating problems with limited measurement data and uncertain measurement errors. First, using the ICMCM technique, a new stochastic model updating equation with an updated coefficient vector is established by considering the uncertain measured modal data. Then, the stochastic model updating equation is solved by the stochastic hybrid perturbation-Galerkin method so as to obtain the random updated coefficient vector. Following that, the statistical characteristics of the updated coefficients can be determined. Numerical results of a continuous beam show that the proposed method can effectively cope with relatively large uncertainty in measured data, and the computational efficiency of this new method is several orders of magnitude higher than that of the Monte Carlo simulation method. When considering the rank deficiency, the proposed stochastic ICMCM method can achieve more accurate updating results compared with the cross-model cross-mode (CMCM) method. An experimental example shows that the new method can effectively update the structural stiffness and mass, and the statistics of the frequencies of the updated model are consistent with the measured results, which ensures that the updated coefficients are of practical significance.