In this paper, we propose a damage identification method based on minimum mean square error estimation for a wind tunnel flexible plate condition monitoring system. Critical structural members of important equipment are large in size, and the measurement systems used to monitor their condition are often complex. The proposed damage identification method is based on the minimum mean squared error estimator and the generalized likelihood ratio test. It introduced activation function to generate the standard deviation of the data, which can then simulate the sensor output. A single sensor damage only affects a single dimension of the output data matrix of the measurement system. However, structural damage affects the output of multiple sensors. The damage identification method proposed in this paper can not only distinguish the sensor damage from the structure damage, but also locate the damaged sensor or structure damage location. This method can identify the measurement system output anomalies caused by structural damage and locate the approximate location of the damage. It can be applied to damage identification of important structural members such as flexible wind tunnel plates. The damage identification method proposed in this paper is of great significance for damage identification and localization of key components and sensor systems.