In the authors’ previous work, an inductive substructure identification method was proposed for shear structures, which utilizes the frequency responses (Fourier transforms) of floor accelerations to formulate a series of inductive substructure identification problems, estimating the structural parameters from top to bottom iteratively. However, the simulation results show that the proposed method can only obtain relatively accurate results if measurement noise is not large. In order to improve the identification accuracy, an uncertainty analysis of the parameter identification errors is conducted for this method in this paper, revealing the important factors that influence the identification accuracy. Based on this result, a new substructure identification method is proposed herein, in which the cross power spectral densities (CPSDs) of structural responses, computed via multi-taper method, are utilized to formulate the substructure identification problems. A similar uncertainty analysis of the identification errors is carried out for the new method, illustrating why the new method could significantly improve the identification accuracy. Finally, a numerical example of 8-story shear building structure is utilized to verify the effectiveness of the new multi-taper based substructure method on enhancing the identification accuracy.