Summary We present a computational methodology for structural identification and damage detection via linking the concepts of seismic interferometry and Bayesian inference. A deconvolution‐based seismic interferometry approach is employed to obtain the waveforms that represent the impulse response functions with respect to a reference excitation source. Using the deconvolved waveforms, we study the following two different damage detection methods that utilize shear wave velocity variations: the arrival picking method and the stretching method. We show that variations in the shear wave velocities can be used for qualitative damage detection and that velocity reduction is more evident for more severely damaged states. Second, a hierarchical Bayesian inference framework is used to update a finite element model by minimizing the gap between the predicted and the extracted time histories of the impulse response functions. Through comparison of the model parameter distributions of the damaged structure with the updated baseline model, we demonstrate that damage localization and quantification are possible. The performance of the proposed approach is verified through two shake table test structures. Results indicate that the proposed framework is promising for monitoring structural systems, which allows for noninvasive determination of structural parameters.