Equivalent circuit method is the most widely used methodology in dynamic modeling of lithium-ion battery. An equivalent circuit with second-order RC network is used to model lithium-ion battery, and a limited memory recursive least square with variable forgetting factor (VFF-LMRLS) is proposed to identify the model parameters in this paper. Firstly, based on the current and voltage data measured from the battery cyclic discharging experiment, the VFF-LMRLS algorithm is used to identify the time-varying parameters of equivalent circuit model. Then, the model verification system is constructed by taking the average value of the identification results in the stable stage as the component parameter value of the equivalent circuit. Finally, through the comparative experiment and analysis with the variable forgetting factor RLS (VFFRLS), it is verified that the terminal voltage error of the proposed method is smaller, indicating that the identified model parameters are closer to the actual parameters.