This paper proposes a novel technique for utilizing electrically conductive textiles as a distributed sensor for detecting and localizing liquids (e.g., blood), damage (e.g., rips, cuts, bullet holes) and, potentially, biosignals. The proposed technique is verified through both simulation and experimental measurements. Circuit theory is employed to depict conductive fabric as a bounded, near-infinite grid of resistors. Solutions to the well-known infinite resistance grid problem are used to confirm the accuracy and validity of this modeling approach. Simulations allow for discontinuities to be placed within the resistor matrix to illustrate the effects of bullet holes within the fabric. A real-time experimental system was developed that uses a multiplexed, Wheatstone bridge measurement approach to determine the resistances of a coarse electrode grid across the conductive fabric. Non-uniform resistance values of the grid infer the presence of liquids and rips in the fabric. The resistor-grid model is validated through a comparison of simulated and experimental results. Results suggest accuracy proportional to the electrode spacing in determining the presence and location of disturbances in conductive fabric samples. Future work is focused on refining the experimental system to provide more accuracy in detecting and localizing events (although just the knowledge of a penetration may be adequate for some intended applications) as well as developing a complete prototype that can be deployed for field testing. Potential applications include intelligent clothing, flexible, lightweight sensing systems, and combat wound detection.