Future planetary exploration missions will require wheeled mobile robots ("rovers") to traverse very rough terrain with limited human supervision. Wheel-terrain interaction plays a critical role in rough-terrain mobility. In this paper, an online estimation method that identifies key terrain parameters using on-board robot sensors is presented. These parameters can be used for traversability prediction or in a traction control algorithm to improve robot mobility and to plan safe action plans for autonomous systems. Terrain parameters are also valuable indicators of planetary surface soil composition. The algorithm relies on a simplified form of classical terramechanics equations and uses a linear-least squares method to compute terrain parameters in real time. Simulation and experimental results show that the terrain estimation algorithm can accurately and efficiently identify key terrain parameters for various soil types.