A real-time calibration system and method for a mobile device having an onboard magnetometer uses an estimator to estimate magnetometer calibration parameters and a magnetic field external to the mobile device (e.g., the earth magnetic field). The calibration parameters can be used to calibrate uncalibrated magnetometer readings output from the onboard magnetometer. The external magnetic field can be modeled as a weighted combination of a past estimate of the external magnetic field and the asymptotic mean of that magnetic field, perturbed by a random noise (e.g., Gaussian random noise). The weight can be adjusted based on a measure of the statistical uncertainty of the estimated calibration parameters and the estimated external magnetic field. The asymptotic mean of the external magnetic field can be modeled as a time average of the estimated external magnetic field.