Evaluation of the dynamic parameters of a modulator based grinding machine system, which is underdamped, is presented. The modulator is one of a displacement-frequency type for dynamic manipulation of the stepping motor of a tool feed system which is part of a composite grinding system for a wide bandwidth control involving both low and high frequency signals. To obtain the parameters of the underdamped system, a method of multiple uses of the transient displacement responses to step commands is proposed to reduce assessment errors. The parameters to be obtained include damping ratio, undamped natural frequency, time constant, and settling time. The evaluation results were obtained based on the minimum of a composite error index using a second order dynamic system model for reference. The parameters will be useful for further development of the composite control for the precision machining process.