This study aims to develop a novel damage detection and preventive maintenance system that can be used for continuous or periodic monitoring of wind turbine components. The main features of the proposed system such as the measurement technique, data analysis procedure, and damage estimation methodology are described in detail by presenting the results of finite element model-based damage simulations, laboratory experiments, and in-field vibration tests. A hybrid measurement system with accelerometers and an automated infrared laser scanner is used to acquire vibration data with high spatial resolution. The obtained response data are then processed to extract the dynamic properties (e.g., natural vibration periods and mode shapes) of the structure. An efficient damage detection algorithm, which is based on monitoring sudden changes observed in mode shapes, is utilized to determine the location and extent of a possible damage. Within the scope of the work, a novel and simplified version of the widely used mode shape curvature method is developed for the rapid analysis and interpretation of the acquired vibration data. The applicability of the proposed methodology is demonstrated on a 61.5 m long numerical blade model proposed for NREL 5 MW Benchmark wind turbine.