We investigate the numerical solution to a low rank perturbed Lyapunov equation A T X + XA = W via the sign function method (SFM). The sign function method has been proposed to solve Lyapunov equations, see e.g. [1], but here we focus on a framework where the matrix A has a special structure, i.e. A = B + U CV T , where B is a blockdiagonal matrix and U CV T is a low rank perturbation. We show that this structure can be kept throughout the sign function iteration but the rank of the perturbation doubles per iteration. Therefore, we apply a low rank approximation to the perturbation in order to keep its numerical rank small. We compare the standard SFM with its structure preserving variant presented in this paper by means of numerical examples from viscously damped mechanical systems. The algebraic Lyapunov equationwhere A, W = W T ∈ R n×n with its solution X ∈ R n×n plays a fundamental role e.g. in the stability analysis of linear systems. We focus on a structured algebraic Lyapunov equation, where , c k being some scaling for k = 0, 1, . . . with the solution X = 1 2 lim k→∞ W k [1]. The given structure can be exploited by this iteration as the following theorem shows.r×r and r n. Then the next sign function iterate A k+1 can be expressed as, whereHence, A k . In the k-th step of the sign function method, the complexity of computing A −1 k can be reduced from O(n 3 ) to O(r 3 ) by using its structure. Nevertheless, the complexity grows per sign function iteration since the rank r of the perturbation doubles per iteration (cf. Theorem 1.1). In order to save workspace and reduce the complexity, we propose to perform rank revealing QR factorizations (RR-QR): Q U R U = U k+1 and Q V R V = V k+1 and a truncated SVDÛΣV T ≈ R U C k+1 R T V w.r.t. some predefined truncation tolerance ε > 0, i.e.,Σ = diag(σ 1 , . . . , σ p ), where σ i ≥ ε for i = 1, . . . , p. This results in Algorithm 1.