Concerning the penetration of renewable energy resources into the power grid, investigation of the power system dynamics to meet the power demand and maintain stability has gathered momentum recently. On the other hand, evaluating the generator parameters in the distributed generation (DG) units as a subsystem of a large-scale power grid is crucial for control and stability analysis purposes. To this aim, a simple and efficacious algorithm to identify the operational parameters of synchronous generators (SGs) in small hydro DGs is proposed here. The required data for the SG identification using the recommended approach is gathered during excitation system start-up while the DG is disconnected from the grid. Using the proposed test procedure, the adverse impact of magnetic saturation on estimation results can be avoided. Furthermore, a straightforward parameter estimation (PE) procedure is established here to obtain the intended parameters from the recorded data. Finally, the proposed method was applied to a 10 MW hydro DG, and the results are discussed.