The purpose of this study is to provide the damage detection method using wavelet transformation. The damage location index through the mode shape of damaged structure is formulated theoretically and applied to numerical analysis model of MATLAB. The shacking table test on reduced 3 story shear building is performed and the dynamic response signal is wavelet transformed. The result of damage detection using wavelet transformed signal is compared to that of non wavelet transformed signal to verify the applicability of the wavelet transformation in damage detection.