Solving the problem of degree of freedom matching for model updating is usually necessary. Model reduction is usually used as a method for solving this problem. But if the FEM is far different from the real structure, the approximation will lower the accuracy of model updating. In order to solve the problem, an iterative method for model reduction-model updating has been proposed which can dispel the error caused by model reduction. The method of IRS model reduction and model updating based on frequency response function (FRF) which is used in the iterative method has been discussed. The updating accuracy has been compared with between the current method and the iterative method by a numerical experiment of beam-plane structure. The result shows that the iterative method can increase the updating accuracy successfully and make the FEM frequency and parameter close to the real structure. In addition, the iterative method has high efficiency of iteration, which makes it meeting the need of real engineering application.