Abstract A method for the localization of structural damage in seismically excited reinforced concrete (RC) structures using a measured acceleration response time series is presented. From the measured response of some or all storeys, the two lowest smoothed eigenfrequencies and mode shape coordinates are estimated. These estimated values are used as an input to a developed substructure iteration method where local storey damages are estimated in such a way that these smoothed values are reproduced. The local damage indicator of a substructure is defined as the average reduction of the stiffness matrix of the initial undamaged substructure. The method is applied to simulated data of a six-storey, two-bay test frame (scale 1:5) that is to be tested at the Structural Laboratory of Aalborg University, Denmark. The simulations are performed using the non-linear finite element program SARCOF. Special emphasis is put on the investigation of the optimal location of measurement sensors, i.e. at which locations along the structure is the most information about the damage distribution gained. In all cases it is assumed that measurements are performed at top storey and ground surface, and the investigations are concentrated on putting one or two more measurement points in between. The two cases where the structure is excited in the first and second mode are investigated, and it is found that in general the sensors should be placed in the lower part of the structure. Furthermore, it is found that the method provides good results even when only the measurements at top storey and ground surface are used.