In order to demonstrate the effectiveness of the process identification algorithm, on- line parameter estimator is evaluated experimentally by using two-tank system with interac- tion. On-line parameter estimator used in this paper is based on a recursive parameter estimation algorithm. MIMO linear, bilinear and quadratic models based on ARMA model are used to identify two-tank system. A quadratic model for two-tank system with interaction is developed to confirm the propriety of MIMO quadratic model used in identification of two- tank system. The results of on-line identification experiments on the two-tank system show that the estimated parameters of each model converge and the output tracking errors are bounded by disturbance bound. But, the quadratic model showed the best convergence.