This paper presents a damage-evaluation method that estimates the damage level of buildings using ambient vibration measurement and a seismic interferometry technique. A new index, named slowness change and which directly relates the reduction in story stiffness to the vibration signal's travel-time delays in propagating waves, is introduced. The sensitivity of the slowness change to damage was examined through ambient vibration testing for a quarter-scale steel frame, where damage was simulated by removing steel links at member ends. The slowness changes computed from the measurement data increased significantly as the number of fractures increased and the story stiffness decreased. The results showed a strong relationship between the location and amount of simulated fractures and the slowness change. The paper also discusses the signal-processing and measurement parameters required to accurately identify the parameters of the propagating waves, error associated with signal processing and measurement, and a borderline between detectable and undetectable damage for both beam fractures and column fractures in steel frames. (C) 2016 American Society of Civil Engineers.