The accurate estimation of state-of-charge (SOC) is one of the most important core functions of a battery management system (BMS), which provides the essential information needed for battery management, monitoring, and status analysis. This paper presents an online SOC estimation method based on AC impedance. A circuit for sensing the voltage and current of the battery is also proposed. The sensed values can be utilized to calculate the AC impedance and then accurately estimate the SOC of a Li-ion battery. First, a 1 kHz sinusoidal ripple is injected into an 18650 Li-ion battery and the AC impedance values are measured from 0 to 100% charging status in 10% increments. The correlations between SOC and AC impedance are then determined by linear regression. In terms of practical application, we simply use the sensing circuit to measure the battery AC voltage and current and calculate the AC impedance. This AC impedance allows a fairly accurate estimation of the battery SOC. To validate the accuracy of the proposed method, a power analyzer was used to actually measure SOC. The average error in estimating SOC is within 4%. This encouraging result shows that the proposed method can provide a simple and practical solution for online estimation of the SOC of Li-ion batteries.