The micro-Doppler effect on a passive positioning system, introduced by motion of a mobile terminal in multipath fading environment, was investigated and its parameters were estimated. First micro-Doppler model under multipath propagation was presented. In addition micro-Doppler effect induced by non-uniform rectilinear motion of mobile terminal in multipath environment was analyzed. Micro-Doppler frequency offset was computed in corresponding to velocity and acceleration of the terminal, which would induce a linear frequency modulation (LFM) on the received signal. Then the fractional Fourier transform (FRFT) was operated upon the multipath micro-Doppler signal, and multiple LMF signal separating method was used to separate and estimate micro-Doppler parameters of each path one by one. The simulation results showed that using FRFT can effectively estimate and separate micro-Doppler frequency offsets of multi path components, and reduce the effect of strong path component upon weak component.