This paper reviews the state-of-the-art approaches in defect localization and specifies the remaining questions and challenges. Furthermore, this study presents a novel defect localization methodology using the nonlinear interaction of primary Lamb wave modes and vibroacoustic modulation (VAM), combined with damage imaging, to address the current shortcomings of defect localization. The study investigates this methodology experimentally with respect to defect interpretation, resolution, and applicability. Two Lamb waves with high and low frequencies, one being continuous and the other a tone burst, were excited using two different piezoelectric sensors. The amplitude of the measured signal at the first sideband frequency was evaluated with a short-time Fourier transform (STFT) and used for damage imaging via the delay and sum method. This study also includes a discussion on identifying the source of nonlinearity reflected in the first sideband. The experimental measurements prove that the localization of defect nonlinearity is possible with high accuracy, without the need for a baseline measurement, and with a minimum number of sensors. Sensitivity measurements with respect to the required length of the high-frequency tone burst and the sensor arrangement were also conducted.