A full nonlinear physical ‘in-service’ model was built for a rail vehicle secondary suspension hydraulic damper with shim-pack-type valves. In the modelling process, a shim pack deflection theory with an equivalent-pressure correction factor was proposed, and a Finite Element Analysis (FEA) approach was applied. Bench test results validated the damper model over its full velocity range and thus also proved that the proposed shim pack deflection theory and the FEA-based parameter identification approach are effective. The validated full damper model was subsequently incorporated into a detailed vehicle dynamics simulation to study how its key in-service parameter variations influence the secondary-suspension-related vehicle system dynamics. The obtained nonlinear physical in-service damper model and the vehicle dynamic response characteristics in this study could be used in the product design optimization and nonlinear optimal specifications of high-speed rail hydraulic dampers.