The estimation of the state of health (SOH) for lithium-ion batteries is considered crucial for ensuring the safe and stable operation of battery management system. However, the accurate estimation of SOH has been a challenge due to the capacity regeneration phenomenon during the discharge process of lithium-ion batteries. To improve estimation accuracy, a hybrid model based on variational mode decomposition (VMD) and bidirectional long short-term memory network with attention mechanism (BiLSTM-ATT) was proposed. First, the battery capacity was decomposed using the VMD algorithm, producing a set of stable sub-sequences. Then, permutation entropy was introduced to reconstruct the sub-sequences to reduce computational complexity. The reconstructed sequences were input into the BiLSTM-ATT model, and feature weights were assigned by the attention mechanism. The SOH values were trained and estimated by the BiLSTM model. Finally, the complete SOH estimation result was obtained by summing all estimated values. Validation was performed using the CS2_36, CS2_38, and CX2_35 datasets from the CALCE lithium battery dataset. The results show that the proposed algorithm maintains a root mean square error within 0.6% and a mean absolute error within 0.4%, which demonstrates higher accuracy and performance compared to other estimation models.