As a common kind of failure, crack damages account for major losses in plastic pipeline systems, which are now increasingly being used. In this study, a crack detection method for plastic pipes using piezoelectric transducers based on nonlinear ultrasonic modulation is developed. First, the low frequency and the high frequency (HF) inputs generated by two lead zirconate titanate (PZT) transducers that are bonded to the outer surface of a plastic pipe are used to induce stress waves along the pipe. For the response signal detected by another PZT, the first spectral sideband is extracted using filtering and synchronous demodulation and then modified by a proposed mean equalization method. Subsequently, by applying wavelet packet analysis, the wavelet energy of the signal can be obtained and is used as an index to determine the damaged state. Finally, a series of experiments on plastic pipes of different crack damaged states were conducted using several ways to verify their effectiveness. Experimental results show that wavelet energy of the response signal decreases as the crack grows and it is mainly determined by the HF component of the response signal, while the wavelet energy of the modified first spectral sideband tends to become larger when the crack grows. Among the investigated approaches, it is found that the first spectral sideband can detect the crack damage state effectively.