The response spectra are widely used in the damage assessment of non-Gaussian random vibration environments and the derivation of damage equivalent accelerated test spectrum. The effectiveness of the latter is strongly affected by modal parameter uncertainties, multiple field data processing, and the nonsmooth shape of the derived power spectral density (PSD). Optimization of accelerated test spectrum derivation based on dynamic parameter selection and iterative update of spectrum envelope is presented in this paper. The extreme response spectrum (ERS) envelope of the field data is firstly taken as the limiting spectrum, and the corresponding relationship between damping coefficient, fatigue exponent, and damage equivalent PSD under different test times is constructed to achieve the dynamic selection of uncertain parameters in the response spectrum model. Then, an iterative update model based on the weighted sum of fatigue damage spectrum (FDS) error is presented to reduce the error introduced by the nonsmooth shape of the derived PSD. The case study shows that undertest can be effectively avoided by the dynamic selection of model parameters. The weighted error is reduced from 80.1% to 7.5% after 7 iterations. Particularly, the error is close to 0 within the peak and valley frequency band.