This paper applied the prevalent acoustic emission (AE) technology to identify the damage modes and critical conditions for FRP/steel-concrete composite beams during the failure process. AE signals generated by the structural damages were classified efficiently by using a novel self-adaptive real-time clustering (SARTC) method; damage modes corresponding to each clustering category were recognized and analyzed, and the dominant damage type at different stages was obtained by comparing the AE activities and feature values. By conducting the AE intensity analysis, the dynamic evolutionary mechanisms and critical conditions of composite beams were identified; the increase in intensity value from 0.2 to 0.3 reflects the process from critical yielding to major fracture. By establishing the non-linear fitting model between local response and cumulative AE energy, the instantaneous status at arbitrary local position of the composite beam can be inverted and predicted quantitatively by independent AE testing.