Structural health monitoring technologies continue to be pursued for aerospace structures in the interests of increased safety and, when combined with health prognosis, efficiency in life-cycle management. The current dissertation develops and validates damage identification technology as a critical component for structural health monitoring of aerospace structures and, in particular, composite unmanned aerial vehicles. The primary innovation is a statistical least-squares damage identification algorithm based in concepts of parameter estimation and model update. The algorithm uses frequency response function based residual force vectors derived from distributed vibration measurements to update a structural finite element model through statistically weighted least- squares minimization producing location and quantification of the damage, estimation uncertainty, and an updated model. Advantages compared to other approaches include robust applicability to systems which are heavily damped, large, and noisy, with a relatively low number of distributed measurement points compared to the number of analytical degrees-of-freedom of an associated analytical structural model (e.g., modal finite element model). Motivation, research objectives, and a dissertation summary are discussed in Chapter 1 followed by a literature review in Chapter 2. Chapter 3 gives background theory and the damage identification algorithm derivation followed by a study of fundamental algorithm behavior on a two degree-of-freedom mass-spring system with generalized damping. Chapter 4 investigates the impact of noise then successfully proves the algorithm against competing methods using an analytical eight degree-of-freedom mass- spring system with non-proportional structural damping. Chapter 5 extends use of the algorithm to finite element models, including solutions for numerical issues, approaches for modeling damping approximately in reduced coordinates, and analytical validation using a composite sandwich plate model. Chapter 6 presents the final extension to experimental systems---including methods for initial baseline correlation and data reduction---and validates the algorithm on an experimental composite plate with impact damage. The final chapter deviates from development and validation of the primary algorithm to discuss development of an experimental scaled-wing test bed as part of a collaborative effort for developing structural health monitoring and prognosis technology. The dissertation concludes with an overview of technical conclusions and recommendations for future work