The ultrasonic modulation technique, developed by inspecting the nonlinearity from the interactions of crack surfaces, has been considered very effective in detecting fatigue cracks in the early stage of the crack development due to its high sensitivity. The wave modulation is the frequency shift of a wave passing through a crack and does not occur in intact specimens. Various parameters affect the modulation of the wave, but quantitative analysis for each variable has not been comprehensively conducted due to the complicated interaction of irregular crack surfaces. In this study, specimens with a constant crack width are manufactured, and the effects of various excitation parameters on modulated wave generation are analyzed. Based on the analysis, an effective crack detection algorithm is proposed and verified by applying the algorithm to fatigue cracks. For the quantitative analysis, tests are repeatedly conducted by varying parameters. As a result, the excitation intensity shows a strong linear relationship with the amount of modulated waves, and the increase of modulated wave is expected as crack length increases. However, the change in the dynamic characteristics of the specimen with the crack length is more dominant in the results. The excitation frequency is the most dominant variable to generate the modulated waves, but a direct correlation is not observed as it is difficult to measure the interaction of crack surfaces. A numerical analysis technique is developed to accurately simulate the movement and interaction of the crack surface. The crack detection algorithm, improved by using the observations from the quantitative analyses, can distinguish the occurrence of modulated waves from the ambient noises, and the state of the specimens is determined by using two nonlinear indexes.