The identification of parameters in multibody systems governed by ordinary differential equations, given noisy experimental data for only a subset of the system states, is considered in this work. The underlying optimization problem is solved using a combination of the Gauss–Newton and single-shooting methods. A homotopy transformation motivated by the theory of state observers is proposed to avoid the well-known issue of converging to a local minimum. By ensuring that the response predicted by the mathematical model is very close to the experimental data at every stage of the optimization procedure, the homotopy transformation guides the algorithm toward the global minimum. To demonstrate the efficacy of the algorithm, parameters are identified for pendulum-cart and double-pendulum systems using only one noisy state measurement in each case. The proposed approach is also compared with the linear regression method.