Currently in Japan, the use of the small wind turbine is an upward trend. There are already many well established small wind turbine generators in use and their various failures have been reported. The most commonly sighted failure is blade damage. Thus the research purpose was set to develop a simple failure diagnostic system, where an Acoustic Emission (AE) signal was produced from the failure part of a blade which was measured by AE sensor. The failure diagnostic technique was thoroughly examined. Concurrently, the damage part of the blade was imitated, the AE signal was measured, and a FFT(Fast Fourier Transform) analysis was carried out, and was compared with the output characteristic. When one sheet of a blade was damaged 40mm or more, the level was computed at which failure could be diagnosed.