Although high performance, light-weight composites are increasingly being used in applications ranging from aircraft, rotorcraft, weapon systems and ground vehicles, the assurance of structural reliability remains a critical issue. In composites, damage is absorbed through various fracture processes, including fiber failure, matrix cracking and delamination. An important element in achieving reliable composite systems is a strong capability of assessing and inspecting physical damage of critical structural components. Installation of a robust Structural Health Monitoring (SHM) system would be very valuable in detecting the onset of composite failure. A number of major issues still require serious attention in connection with the research and development aspects of sensor-integrated reliable SHM systems for composite structures. In particular, the sensitivity of currently available sensor systems does not allow detection of micro level damage; this limits the capability of data driven SHM systems. As a fundamental layer in SHM, modeling can provide in-depth information on material and structural behavior for sensing and detection, as well as data for learning algorithms. This dissertation focusses on the development of a multiscale analysis framework, which is used to detect various forms of damage in complex composite structures. A generalized method of cells based micromechanics analysis, as implemented in NASA's MAC/GMC code, is used for the micro-level analysis. First, a baseline study of MAC/GMC is performed to determine the governing failure theories that best capture the damage progression. The deficiencies associated with various layups and loading conditions are addressed. In most micromechanics analysis, a representative unit cell (RUC) with a common fiber packing arrangement is used. The effect of variation in this arrangement within the RUC has been studied and results indicate this variation influences the macro-scale effective material properties and failure stresses. The developed model has been used to simulate impact damage in a composite beam and an airfoil structure. The model data was verified through active interrogation using piezoelectric sensors. The multiscale model was further extended to develop a coupled damage and wave attenuation model, which was used to study different damage states such as fiber-matrix debonding in composite structures with surface bonded piezoelectric sensors.