In this study we propose a new concept and methodology of hierarchical identification. The need for such a methodology comes from the fact that identification of large-scale systems (LSSs) by one-shot approach may be numerically very complex. The analysis of LSSs is, in general, not approached by the one-shot methodologies normally associated with non-LSSs. The proposed method of hierarchical identification can be therefore viewed as an extension of LSS methodologies to system identification. LSS methodology aims at breaking up the initial, complex problem into a set of smaller size subproblems.