This paper presents a novel algorithm for compensating the changes in conductance signatures of a piezo sensor due to the temperature variation employed in condition monitoring using the electro-mechanical impedance (EMI) approach. It is crucial to consider the changes in an EMI signature due to temperature before using it for comparison with the baseline signature. The shifts in the signature due to temperature can be misinterpreted as damages to the structure, which might also result in a false alarm. In the present study, the compensation values are calculated based on experiments on piezo sensors both in a free boundary condition and in a bonded condition on a metallic host structure. The values were further validated experimentally for damage detection on a large 2D steel plate structure. The variation in first natural frequency values for the unbonded piezo sensor at different temperatures has been used to develop the compensation algorithms. Whereas, in the case of the bonded sensor, the shift in structural peaks has been used. The developed compensation relations showed promising results in damage detection. Lastly, a finite element-based study has also been performed, supporting the experimental findings. The outcome of this study will aid in the compensation of the signatures in the structure due to temperature variation in the conductance signature.