This paper discusses on-line estimation of rotor body parameters of the synchronous hydro-generator under saturated condition. A new model of the saturated synchronous salient-pole machine, based on the saturated synchronous inductances which are estimated from measured steady-state operating data, is presented. Using this model the excitation disturbance responses of the saturated synchronous generator are simulated. The synthetic data, obtained by these simulations, are used for testing the estimation procedures and models for both the field and damper winding under saturated condition. It is shown that, by comparison with unsaturated condition, estimation models become more complex and estimation procedures are generally less robust. Particularly, when the damper winding is under consideration, it has been shown that the estimation process gives wrong parameters if the machine saturation characteristic obtained by measurements is not perfectly accurate. Results of measurements performed on the 34 MVA generator in the Peruca hydroelectric power plant in Croatia are presented. The paper also discusses the influence of the measurement noise on the estimation process.