The ship motion system is a nonlinear control object, and its system parameters exhibit time-varying characteristics with the ship motion state, which increases the difficulty of control. Therefore, parameter identification has an important significance for the stability of ship motion control. Aiming at the real-time identification problem of the nonlinear and time-varying ship motion system during movement, this paper reconstructs the ship motion system with the propeller speed and rudder angle as control variables and designs an online identification algorithm with the sliding time window method based on the extended Kalman filter algorithm. In addition, to solve the problem of noise in ship motion data collected in real-time, a real-time wavelet filter is developed to perform online preprocessing of the input data of the identification algorithm. The applicability of the method is further demonstrated via a model-scale Korea Research Institute of Ships and Ocean Engineering container ship free-running experiments in a basin.