Hybrid Simulation (HS) and Real Time Hybrid Simulation (RTHS) are recognized as powerful techniques for civil infrastructure assessment. Typically in HS/RTHS, a critical component is isolated as the physical component in the simulation, while the remainder of the structure is modeled numerically. This approach enables response evaluation on both local and global level. Broadening the applications that would like to use HS and RTHS requires that we examine more complex structural systems. When multiple components in the structural system have the same design and contribute roughly equally to the response, it may be difficult to select the most appropriate physical component. However, modeling errors in those structural components that reside in the numerical component can influence the accuracy of the global responses. Model updating based on the responses of the physical component for determining the model parameters will reduce the influence of the modeling errors. Advances in online system identification techniques and their application to more complex structural models, enables the option of incorporating online model updating into HS/RTHS. Through a simplified case study, we explore the feasibility of HS/RTHS with model updating (HSMU/RTHSMU). A two story steel frame equipped with two identical magnetic-rheological (MR) dampers. In RTHS, the first story MR damper is loaded as the physical component and the remainder of the structure, including the frame and the second MR damper, is numerically modeled. Simulation and conventional RTHS response are considered. In each case the second story MR damper model uses one initial parameter set, which is then updated online using identified parameters based on the physical component (RTHSMU). Online model updating is then investigated using a validation signal, and the fidelity and advantages of RTHSMU are discussed.