We have developed a systematic nonlinear inversion method for estimating rupture propagation and the underlying dynamic parameters for large historical earthquakes. The rupture modeling is carried out using a three-dimensional finite-difference method, and the inversion is implemented by a neighbourhood algorithm, minimizing the misfit between computed and observed near-fault seismograms. We test the method by estimating the stress drop within 32 regions on the causative fault for the 2000 magnitude 6.6 Western Tottori, Japan, earthquake. While the dynamic models show both similarities and differences with the conventional kinematic models, our method provides an ensemble of physically-correct models with plausible rupture propagation for the earthquake.