The relative contribution of sexual and natural selection to evolution of sexual ornaments has rarely been quantified under natural conditions. In this study we used a long-term dataset of house sparrows in which parents and offspring were matched genetically to estimate the within- and across-sex genetic basis for variation and covariation among morphological traits. By applying two-sex multivariate “animal models” to estimate genetic parameters, we estimated evolutionary changes in a male sexual ornament, badge size, from the contribution of direct and indirect selection on correlated traits within males and females, after accounting for overlapping generations and age-structure. Indirect natural selection on genetically correlated traits in males and females was the major force causing evolutionary change in the male ornament. Thus, natural selection on female morphology may cause indirect evolutionary changes in male ornaments. We observed however no directional phenotypic change in the ornament size of one-year-old males during the study period. On the other hand, changes were recorded in other morphological characters of both sexes. Our analyses of evolutionary dynamics in sexual characters require application of appropriate two-sex models to account for how selection on correlated traits in both sexes affects the evolutionary outcome of sexual selection.