Electrode wear is inherent in the resistance spot welding process. It determines the electrical and mechanical contact condition and thus strongly affects the resistance spot weld quality. A practical approach to minimizing the electrode wear effect is to compensate the welding current as the electrodes wear. However, the existing methods for welding current compensation rely on either a predetermined stepper schedule or an expulsion detection algorithm. These methods are not reliable since the welding current is not determined based on the contact condition for each weld made in the welding process. This paper presents an on-line electrode wear estimation approach to determining the contact condition and the welding current needed to make every weld a good weld during the entire life of the electrodes. In the study, an incrementally coupled finite element simulation was first formulated to analyze the contact area behavior in the resistance spot welding process. A lumped parameter model was then developed to characterize the contact area change with the dynamic resistance measurement. A calibration and an estimation algorithm were subsequently devised for on-line applications. The proposed approach has been validated with experimental data. The results have shown that the estimation algorithm is robust under various process conditions including both welding current and electrode force.