A new method of system identification and damage detection of high-rise buildings is proposed in which high-rise buildings are represented by a shear-bending model. The method is devised to find the story shear and bending stiffnesses of a specific story from the floor accelerations just above and below the specific story. The special characteristic of the proposed method is to derive a set of closed-form expressions for the story shear and bending stiffnesses in terms of the limited floor accelerations. It is demonstrated that the method is suitable for the damage detection because the observation of floor accelerations at two stories is a simple task and damage detection can be performed directly from the change of a specific function of frequency at zero frequency. It is shown that a difficulty of prediction of the specific function in a low frequency range can be overcome by introducing an ARX (Auto-Regressive model with eXogenous input) model with constraints on transfer functions. Copyright (c) 2012 John Wiley & Sons, Ltd.