In this paper, the dynamic self-optimizing inverse method (Self-OPTIM) has been proposed to inversely estimate model parameters by using structural responses under dynamic loadings such as earthquakes. The proposed dynamic Self-OPTIM requires only acceleration records at the ground boundary support and a certain number of internal degrees of freedom. Unlike other signal matching approaches used in model updating, dynamic Self-OPTIM automatically minimizes an implicit objective function defined as a function of internal full-field stresses and strains. By use of the dynamic Self-OPTIM, dynamic stiffness model parameters of bridge embankments and a group of piles at the bottom of the central pier were successfully identified by using in situ earthquake records. The identified dynamic stiffness values of the embankment with abutment and piles are then compared with those estimated from the response of three-dimensional finite-element dynamic steady-state analysis and values from the literature. Validation tests with new earthquake records have also been demonstrated. Results from sensitivity analyses could reasonably identify critical parameters that mostly influence dynamic response under the given earthquake loading.