A new operational modal analysis (OMA) method is developed for estimation of modal parameters (MPs) of a rotating structure (RS) subject to random excitation using a nonuniform rotating beam model, an image processing method, and an improved demodulation method. The solution to the governing equation of a nonuniform rotating beam is derived, which can be considered as the response of the beam measured by a continuously scanning laser Doppler vibrometer (CSLDV) system. A recently developed tracking CSLDV system can track and scan the RS. The image processing method determines the angular position of the RS so that the tracking CSLDV system can sweep its laser spot along a time-varying path on it. The improved demodulation method obtains undamped mode shapes (UMSs) of the RS by multiplying its measured response by sinusoids whose frequencies are its damped natural frequencies (DNFs) that are obtained from the fast Fourier transform (FFT) of the measured response. Experimental investigation of the OMA method using the tracking CSLDV system is conducted, and MPs of a rotating fan blade (RFB), including DNFs and UMSs, with different constant speeds and its instantaneous MPs with a nonconstant speed are estimated. Estimated first DNFs and UMSs of the stationary fan blade and RFB are compared with those from the lifting method that was previously developed by the authors.