A decentralized damage detection method for structure was applied to a shake table experiment which was carried out by Building Research Institute as part of U.S.-Japan cooperative research efforts. This method requires only three sensors to identify localized damage in any story of a structure building. A substructure method was used in this method to divide a complete structure into several substructures. Each substructure has a considerably smaller number of degrees of freedom (DOFs) which makes fewer requirements on the computing power of the data processing system. Moreover the damage detection process can be independently conducted on each substructure. Thus, this method is very attractive especially when smart sensors that have the embedded computing power are used.