In this paper, it is described how the matrix mixing model updating technique can be combined with the local correspondence (LC) mode shape expansion algorithm, to give a new finite element (FE) model updating method. The matrix mixing method uses that the inverse mass and stiffness matrices can be expressed as a linear combination of outer products of FE mode shape vectors, where the low-frequency part of these sums are substituted with expanded test modes. The approach is meant to update FE models in one-step and is exact, except for the following two approximations: the mode shape smoothing and the mass scaling of the expanded experimental mode shapes. A simulation study illustrates the errors from the two approximations and shows the ability of the technique to improve the modal assurance criterion (MAC) values so that they get very close to unity. Finally, the performance of the proposed updating method is assessed by means of an application example in which the FE model is updated based on the test modes of a real structure.