Smart structures generally consist of abase material (e.g., composite) containing large numbers of embedded and interconnected sensors, actuators, and processors. With these embedded components, smart structures have a built-in ability to sense and respond to environmental stimuli without requiring externally mounted transducers. Research is currently underway to develop smart structures for a variety of applications, including the self-diagnosis of the structure for damage detection and health monitoring. Industries that have a particular interest in this area include aerospace, marine, ground transportation, power utilities, and manufacturing. In recent years, the research has focused on the materials science issues related to embedding the transducers. However, significant barriers still remain that are preventing wide spread use of smart materials for health monitoring. This paper will discuss the barriers caused by the difficult problem of integrating and processing the wealth of information from the large numbers of transducers.