The authors have previously shown that many traditional approaches to operational modal analysis (OMA) struggle to properly identify the modal damping ratios for bridges under traffic loading due to the interference caused by the driving frequencies of the traffic loads. This paper presents a novel methodology for modal parameter estimation in OMA that overcomes the problems presented by driving frequencies and significantly improves the damping estimates. This methodology is based on finding the power spectral density (PSD) of a given modal coordinate, and then dividing the modal PSD into separate regions, left- and right-side spectra. The modal coordinates were found using a blind source separation (BSS) algorithm and a curve-fitting technique was developed that uses optimization to find the modal parameters that best fit each side spectra of the PSD. Specifically, a pattern-search optimization method was combined with a clustering analysis algorithm and together they were employed in a series of stages in order to improve the estimates of the modal damping ratios. This method was used to estimate the damping ratios from a simulated bridge model subjected to moving traffic loads. The results of this method were compared to other established OMA methods, such as Frequency Domain Decomposition (FDD) and BSS methods, and they were found to be more accurate and more reliable, even for modes that had their PSDs distorted or altered by driving frequencies. (C) 2016 Elsevier Ltd. All rights reserved.