Estimating models for both plant and disturbance dynamics is important in control design applications that focus on disturbance rejection. Several methods for low-order approximate model estimation on the basis of closed-loop data exist in the literature, but fail to address the simultaneous estimation of low-order approximate models of both plant and disturbance dynamics. In this paper a new extended two-stage methodology is proposed that allows for low-order approximate disturbance model estimation. In the proposed extended two-stage method the first stage is used to estimate high-order models for filtering purposes. In the second stage, filtered signals are used to provide the means for low-order approximate model estimation of both plant and disturbance dynamics. (c) 2006 Elsevier Ltd. All rights reserved.