The use of the Continuous Wavelet Transform method for modal identification and structural damage analysis is discussed in this paper. The wavelet transform method can be used to understand the responses of different structures under different loading conditions, i.e. after noise-embedded shock signals. The method allows the processed signal to be displayed in the time-frequency plane, making it possible to estimate modal characteristics, or study the effect of structural defects on the vibration behaviour of the structure. The paper summarises the important aspects of the method and proposes a novel formulation for structural assessment. Two example applications are presented, a four-degree-of-freedom linear system vibrating freely and a damaged masonry wall subjected to shear compression and ambient vibration tests. The examples show that the CWT method can be used to obtain valuable information for structural characterization.