Soft‐matter technologies have a potentially central role in wearable computing, human–machine interaction, soft robotics, and other emerging applications that require highly compliant and elastic materials. However, these technologies are largely composed of soft materials that are susceptible to damage and loss of functionality when exposed to real‐world loading conditions. To address this critical challenge, we present a soft responsive material that, like natural nervous tissue, is able to identify, compute, and signal damage in real‐time. The soft composite material contains liquid metal droplets dispersed in an elastomer matrix that rupture when mechanical damage occurs (e.g., compression, fracture, or puncture), creating electrically conductive pathways. The resulting change in local conductivity can be actively sensed and coupled with actuation, communication, and computation in a manner that presents new opportunities to identify damage, calculate severity, and respond to prevent failure within soft material systems. When placed on the surface of a soft, humanoid‐like inflatable structure, the skin can detect puncture damage and control the operation of an embedded fan to prevent deflation.