The paper describes the main features of an interactive software tool developed in support of system identification education. This Interactive Tool for System Identification Education (ITSIE) provides two distinct functional modes that are very useful from an educational point of view. The simulation mode enables the student to evaluate the main stages of system identification, from input signal design through model validation, simultaneously and interactively in one screen on a user-specified dynamical system. The real data mode allows the user to load experimental data obtained externally and identify suitable models in an interactive fashion. The interactive tool enables students to discover a myriad of fundamental system identification concepts with a much lower learning curve than existing methods.