Iterative tuning of the parameters of a restricted-order controller using the data acquired in closed-loop operation seems to be a promising idea, especially for tuning PID controllers in industrial applications. In this paper, a new tuning approach based on decorrelation is proposed. The basic idea is to make the output error between the designed and achieved closed-loop systems uncorrelated with the reference signal. The controller parameters are calculated as the solution to correlation equations involving instrumental variables. Different choices of instrumental variables are proposed and compared via simulation. The stochastic properties of the correlation approach are compared with those of standard IFT using Monte-Carlo simulation. The proposed approach is also implemented on an experimental magnetic suspension system, and excellent performance using only a few real-time experiments is achieved.