A practical online balancing methodology is proposed for a rotor system supported on conventional bearings, utilizing an Active Magnetic Bearing (AMB). It does not require mechanical trial masses to be kept at different balancing planes to estimate system parameters and residual unbalances. An Improved Influence Coefficient Method (IICM) is utilized to estimate the residual unbalances at the limited balancing plane locations in the rotor system having residual unbalances. The virtual trial unbalances utilized in the IICM aregenerated by the AMB as magnetic forces. The residual unbalances are estimated on the experimental test rig designed for rotor balancing incorporated with AMB. With corrected residual unbalances, the rotor system is rotated, both inclusive and exclusive of AMB, to observe the suppression of the vibration responses. It is seen that without application of the AMB also, the balanced system rotates with very less amplitude of vibration, which is useful in case the AMB system fails to suppress the vibration.