Closed-loop identification scheme using OBF-ARMAX model structure is presented. The proposed structure can be used to identify both open-loop stable and open-loop unstable processes that are stabilized by a feedback controller. The algorithm for estimating the model parameters and the formula for the multi-step ahead prediction are derived. The proposed identification scheme is demonstrated using two simulation case studies: One for open-loop stable and another for open-loop unstable. Both case studies demonstrate that the proposed scheme can be effectively used for closed-loop identification of both open-loop stable and open-loop unstable systems that are stabilized by a feedback control system. © 2010 Asian Network for Scientific Information.