A feasible online test procedure is proposed in this paper to estimate the full set parameters of synchronous generators (SG). The recommended test procedure involves applying step perturbations to one of the power system stabilizer (PSS) inputs like active power or rotor speed, such that the stator and field winding signals change considerably, which makes them suitable for parameter estimation purposes. Furthermore, an accurate approach is suggested to estimate SG's parameters by utilizing the recorded data from the proposed test procedure. The effect of magnetic saturation, which can influence the estimation results, is also taken into account continuously during the parameter estimation. Finally, the proposed test is applied to a 200 MVA gas unit SG, and the parameters are estimated using a Genetic algorithm (GA) from the measurement data. The results show the effectiveness of the proposed method.