Power system is featured with natural closed-loop characteristics. The load model parameters identification has obvious closed-loop characteristics when the injection position of excitation signals is different from the measurement position of identification signals. In this paper, the identification of load mechanism model parameters under closed-loop condition is studied by taking the distribution area modeling scenario as an example. The basic conditions for closed-loop identification of mechanism model are summarized through the comparison and analysis of common closed-loop identification methods. On this basis, a two-stage identification method is selected which can directly identify the original system model without prior knowledge of feedback channel model. At the second stage of two-stage identification method, the load mechanism model is linearized and converted into a discrete transfer function form to realize the online identification of mechanism model parameters. Through simulation analysis, the closed-loop characteristics of power system modeling and the effectiveness of the proposed two-stage identification method are verified.