A novel iterative model updating method is developed to identify the local nonlinear joint properties using the frequency response functions (FRFs) of assembled structures. In this paper, the least-squares fitting method was used to transform the sensitivity matrix into a square iteration matrix to match the dimensions of the objective functions and nonlinear joint model parameters. Leveraging the Newton’s iteration, the adaptive successive over-relaxation (A-SOR) was used to ensure iteration convergence while the multi-scale parameter adjusting (MPA) strategy was developed to degrade the ill-condition of the iteration matrix. Two updating examples of phenomenological equivalence models were applied to demonstrate the effectiveness of the proposed method. The nonlinear FRFs of a lap-type bolted joint beam system with Iwan model were simulated as the objective functions to identify the local nonlinear joint properties, as well as experimental investigations of a metal rubber isolation system with a high-order polynomial model. The proposed method was validated by the good agreement of the comparison results, and it indicated a better model updating performance with a much smaller condition number of the iteration matrix.