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Stiffness-based methods are widely used for damage detection in dynamic systems. These methods use the change in natural frequencies and modeshapes for damage detection. These methods are not efficient for detecting a small damage in the structure as there is a negligible change in natural frequencies and modeshapes due to a small damage in a structure. It has been observed that the damage location acts a source of energy dissipation and thus there is a significant change in damping characteristics of a structure due to a small damage in a structure. In this paper, new damping-based damage detection is proposed. The results have shown that damping-based damage detection method can be used for detecting a very small damage in a structure.