The purpose of this work is to suggest a new non-contact damage detection method for rotating ferromagnetic shafts. The presence and the location of a damage in rotating shafts are assessed by means of longitudinal elastic waves propagating along the shafts. These waves are measured by non-contact magnetostrictive sensors consisting of a coil and bias magnets. This paper shows the effectiveness of the sensors in the damage detection of rotating shafts. Several issues occurring in the application of the sensors to rotating shafts are carefully investigated.