The unknown joint dynamics are the main obstacle that limits the accuracy of the finite element (FE) model of a machine-tool spindle assembly. In this paper, an FE model updating method is proposed to assist industrial engineers in achieving a reliable model that can accurately represent the dynamic characteristics of machine-tool spindle systems. In the proposed FE model updating procedure, the iterative algorithm based on frequency response functions (FRFs) is applied. The joint stiffness parameters are identified through the iteration process, while the FE model is updated simultaneously. The proposed method was applied to update an existing coupled model of a machine-tool spindle system. The experimental results show that the identified joint stiffness parameters are acceptable and the dynamic behavior of the spindle mounted in the machine tool column is predicted reliably.