Modal parameter estimation is crucial in vibration-based damage detection and deserves increased attention and investigation. Concrete arch dams are prone to damage during severe seismic events, leading to alterations in their structural dynamic characteristics and modal parameters, which exhibit specific time-varying properties. This highlights the significance of investigating the evolution of their modal parameters and ensuring their accurate identification. To effectively accomplish the recursive estimation of modal parameters for arch dams, an adaptive recursive subspace (ARS) method with variable forgetting factors was proposed in this study. In the ARS method, the variable forgetting factors were adaptively updated by assessing the change rate of the spatial Euclidean distance of adjacent modal frequency identification values. A numerical simulation of a concrete arch dam under seismic loading was conducted by using ABAQUS software, in which a concrete damaged plasticity (CDP) model was used to simulate the dam body’s constitutive relation, allowing for the assessment of damage development under seismic loading. Utilizing the dynamic responses obtained from the numerical simulation, the ARS method was implemented for the modal parameter recursive estimation of the arch dam. The identification results revealed a decreasing trend in the frequencies of the four initial modes of the arch dam: from an undamaged state characterized by frequencies of 0.910, 1.166, 1.871, and 2.161 Hz to values of 0.895, 1.134, 1.842, and 2.134 Hz, respectively. Concurrently, increases in the damping ratios of these modes were observed, transitioning from 4.44%, 4.28%, 5.42%, and 5.56% to 4.98%, 4.91%, 6.61%, and 6.85%%, respectively. The correlation of the identification results with damage progression validated the effectiveness of the ARS method. This study’s outcomes have substantial theoretical and practical importance, facilitating the immediate comprehension of the dynamic characteristics and operational states of concrete arch dam structures.