The paper describes the conceptual basis and functionality of ITSIE, an Interactive Tool for System Identification Education. The tool is developed using Sysquake, a Matlab-like language with fast execution and excellent facilities for interactive graphics, and is delivered as a stand-alone executable that is readily accessible to students and users. The tool focuses on the open-loop Identification of a SISO fifth-order system subject to multiple noise sources using classical prediction-error methods. The various stages of system Identification, ranging from input signal design using PRBS and multisine signals through model validation are evaluated simultaneously and interactively in one screen. The highly visual and strongly coupled nature of system Identification is very amenable to interactive tools, and the tool presented in this paper enables students to discover a myriad of important Identification topics with a much lower learning curve than existing methods. Plans for additional tools in the series are discussed.