The stability lobe diagrams predicted using the tool frequency response function (FRF) at the idle state usually have discrepancies compared with the actual stability cutting boundary. These discrepancies can be attributed to the effect of spindle rotating on the tool FRFs which are difficult to measure at the rotating state. This paper proposes a new tool FRF identification method without using non-contact sensor for the rotating state of the spindle. In this method, the FRFs with impact applied on smooth rotating tool and vibration response tested on spindle head are measured for two tools of different lengths clamped in spindle-holder assembly. Based on those FRFs, an inverse receptance coupling substructure analysis (RCSA) algorithm is developed to identify the FRFs of spindle-holder-partial tool assembly. A finite-element modeling (FEM) simulation is performed to verify the validity of inverse RCSA algorithm. The tool point FRFs at the spindle rotating state are obtained by coupling the FRFs of the spindle-holder-partial tool and the other partial tool. The effects of spindle rotational speed on tool point FRFs and stability lobe diagrams are investigated. The cutting experiment demonstrates that this method can accurately identify the tool point FRFs and predict cutting stability region under spindle rotating state.