Abstract This paper presents a method to identify and control electro-pneumatic servo drives in a real-time environment. Acquiring the system’s transfer function accurately can be difficult for nonlinear systems. This causes a great difficulty in servo-pneumatic system modeling and control. In order to avoid the complexity associated with nonlinear system modeling, a mixed-reality environment (MRE) is employed to identify the transfer function of the system using a recursive least squares (RLS) algorithm based on the auto-regressive moving-average (ARMA) model. Online system identification can be conducted effectively and efficiently using the proposed method. The advantages of the proposed method include high accuracy in the identified system, low cost, and time reduction in tuning the controller parameters. Furthermore, the proposed method allows for online system control using different control schemes. The results obtained from the on-line experimental measured data are used to determine a discrete transfer function of the system. The best performance results are obtained using a fourth-order model with one-step prediction. Keywords On-line identification . Auto-regressive moving-average . Pneumatic servo drive . Mixed-reality environment