In this paper, we introduce cross-multiplicative transfer function (CMTF) approximation for modeling linear systems in the short-time Fourier transform (STFT) domain. We assume that the transfer function can be represented by cross-multiplicative terms between distinct subbands. We investigate the influence of cross-terms on a system identifier implemented in the STFT domain and derive analytical relations between the noise level, data length, and number of cross-multiplicative terms, which are useful for system identification. As more data becomes available or as the noise level decreases, additional cross-terms should be considered and estimated to attain the minimal mean-square error (mse). A substantial improvement in performance is then achieved over the conventional multiplicative transfer function (MTF) approximation. Furthermore, we derive explicit expressions for the transient and steady-state mse performances obtained by adaptively estimating the cross-terms. As more cross-te...