In order to control an unmanned helicopter accurately and reliably, it is necessary to have a precise mathematical model of its dynamics. This paper presents a new timedomain identification method and process for full state space model of small-scale unmanned helicopters. The identification method is called ISAcwPEM (Improved Simulated Annealing combined with Prediction Error Method), which is not sensitive to initial point selection and doesn’t require frequency-sweeping inputs. Firstly, the primary parameters to be identified are selected by model sensitivity analysis. After that, the improved simulated annealing algorithm runs in a distributed computing platform to figure out a 13-order state space model of the SJTU T-REX700E small-scale unmanned helicopter (consisting of a cruise modal and a hover modal). Then the iterative Prediction Error Method (PEM) is used to optimize the model. In addition, the time-delay term and the trim term are estimated and added to the model. Finally, the effectiveness of the identification method is well validated by real outdoor flight experimental results.