A novel modal identification approach for the use of a wireless sensor network (WSN) for structural health monitoring is presented, in which the computational task is distributed among remote nodes to reduce the communication burden of the network and, as a result, optimize the time and energy consumption of the monitoring system. Considering the need for having an agile system to capture the earthquake response and also the limited energy resource in WSN, such algorithms for speeding the analysis time and preserving energy are essential. The algorithm of this study, called iterative modal identification (IMID), relies on an iterative estimation method that solves for unknown parameters in the absence of complete information about the system. Applying IMID in WSN-based monitoring systems results in significant savings in time and energy. Validation through implementation of the algorithm on numerically simulated and experimental data illustrates the superior performance of this approach.