To improve the speed and robustness of Recursive Least Squares (RLS) algorithm with forgetting factor in the parameter identification of ship course motion mathematical model, an RLS algorithm with dynamic forgetting factor based on fuzzy control was proposed. Firstly, the residual between the theoretical model output and actual model output was calculated. Secondly, an evaluation function was constructed on the basis of the residual, to assess the parameter identification error. Then, a fuzzy controller with evaluation function and its change rate as two inputs was adopted to realize the dynamic adjustment of the forgetting factor. Combined with designed fuzzy control rule table, the modification of the forgetting factor was obtained by the fuzzy controller at last. Simulation results show that the forgetting factor can be adjusted according to the parameter identification error in the presented algorithm, which achieves higher precision and faster parameter identification than RLS algorithm with constant forgetting factor.