In this paper a method is presented for the estimation of material parameters of composites. The method is general in its application and can be used for complex material laws and microstructural geometries. It is founded on a combined use of the finite element method and a system identification technique based on the Kalman filter. With the finite element method, displacement fields are calculated as a function of the material parameters of the composite modelled with a homogeneous overall material law. The displacements in the actual composite material are also calculated with the finite element method by means of a detailed microstructural analysis. By comparing both displacement fields, the Kalman filter then calculates the optimal material parameter values for the overall material law. As an example effective material parameters of a linear elastic composite are calculated.