A new two stages method for on-line identification of bolt state is proposed based on the existing model damage identification technology. The first stage to identify whether there is a torque in bolt connection is reduced, at the same time a new damage index based on modal strain energy is set up, and bolt looseness in the nonlinear performance is discussed. The purpose of the second stage is to identify the residual torque, the equivalent stiffness of bolted connection is identified by a sensitivity-based updating based on the first 3 order modes, and the relationship between the residual torque and the equivalent stiffness is established. Finally, under laboratory conditions, two rectangular steel plates connected by bolts are used as the experimental object, the looseness of the bolts is represented by changing the relative residual stress. The results show that the purposed method can be used to identify the happening of torque reduction, and estimate whether the residual torque value is lower than the limit value.