A new dynamic subgrid-scale (SGS) model, which is proved to satisfy the principle of asymptotic material frame indifference (AMFI) for rotating turbulence, is proposed based on physical and mathematical analysis. Comparison with direct numerical simulation (DNS) results verifies that the new SGS model is effective for large eddy simulation (LES) on rotating turbulent flow. The SGS model is then applied to the LES of the spanwise rotating turbulent channel flow to investigate the rotation effect on turbulence characteristics, budget terms in the transport equations of resolved Reynolds stresses, and flow structures near the wall regions of the rotating channel.