Storage and management of energy is becoming a more and more important problem every day, especially for electric and hybrid vehicle applications. Li-ion battery is one of the most important technological alternatives for high capacity energy storage and related industrial applications. State of Health (SoH) of Li-ion batteries plays a critical role in their deployment from economic, safety, and availability aspects. Most, if not all, of the studies related to SoH estimation focus on the measurement of a new parameter/physical phenomena related to SoH, or development of new statistical/computational methods using several parameters. This paper presents a new approach for SoH estimation for Li-ion battery systems with multiple battery cells: The main idea is a new circuit topology which enables separation of battery cells into two groups, main and test batteries, whenever a SoH related measurement is to be conducted. All battery cells will be connected to the main battery during the normal mode of operation. When a measurement is needed for SoH estimation, some of the cells will be separated from the main battery, and SoH estimation related measurements will be performed on these units. Compared to classical SoH measurement methods which deal with whole battery system, the proposed method estimates the SoH of the system by separating a small but representative set of cells. While SoH measurements are conducted on these isolated cells, remaining cells in the main battery continue to function in normal mode, albeit in slightly reduced performance levels. Preliminary experimental results are quite promising, and validate the feasibility of the proposed approach. Technical details of the proposed circuit architecture are also summarized in the paper.