In recent years, innovative vibro-modulation technique has been introduced for detection of contact-type interfaces such as cracks, debondings, and delaminations. The technique utilizes the effect of nonlinear interaction of ultrasound and vibrations at the interface of the defect. Vibration varies on the contact area of the interface modulating passing through ultrasonic wave. The modulation manifests itself as additional side-band spectral components with the combination frequencies in the spectrum of the received signal. The presence of these components allows for detection and differentiation of the contact-type defects from other structural and material inhomogeneities. Vibro-modulation technique has been implemented in N-SCAN damage detection system. The system consists of a digital synthesizer, high and low frequency amplifiers, a magnetostrictive shaker, ultrasonic transducers and a PC-based data acquisition/processing station with N-SCAN software. The ability of the system to detect contact-type defects was experimentally verified using specimens of simple and complex geometries made of steel, aluminum, composites and other structural materials. N-SCAN proved to be very effective for nondestructive testing of full-scale structures ranging from 24 foot-long gun barrels to stainless steel pipes used in nuclear power plants. Among advantages of the system are applicability for the wide range of structural materials and for structures with complex geometries, real time data processing, convenient interface for system operation, simplicity of interpretation of results, no need for sensor scanning along structure, onsite inspection of large structures at a fraction of time as compared with conventional techniques. This paper describes the basic principles of nonlinear vibro-modulation NDE technique, some theoretical background for nonlinear interaction and justification of signal processing algorithm. It is also presents examples of practical implementation and application of the technique.