The hydrodynamic coefficients estimation (HCE) is important to design the autopilot and to predict the maneuverability of an underwater vehicle. In this paper, a system identification is proposed for an HCE of an underwater vehicle. First, we attempt to design the HCE algorithm which is insensitive to initial conditions and has good convergence, and which enables the estimation of the coefficents by using measured displacements only. Second, the sensor and measurement system which gauges the data from the full scale trials is constructed and the data smoothing algorithm is also designed to filter the noise due to irregular fluid flow without changing the data characteristics itself. Lastly the hydrodynamic coefficients are estimated by applying the measured data of full scale trials to the developed algorithm, and the estimated coefficients are verified by full scale trials.