In this paper, an identification method of impact force is proposed for composite structures. In this method, the relation between force histories and strain responses is first formulated. The transfer matrix, which relates the strain responses of sensors and impact force information, is constructed from the finite element method (FEM). Based on this relation, an optimization model to minimize the difference between the measured strain responses and numerically evaluated strain responses is built up to obtain the impact force history. The identification of force history is performed by a modified least-squares method that imposes the penalty on the first-order derivative of the force history. Moreover, from the relation of strain responses and force history, an error vector indicating the force location is defined and used for the force location identification. The above theory has also been extended into the cases when using acceleration information instead of strain information. The validity of the present method has been verified through two experimental examples. The obtained results demonstrate that the present approach works very well, even when the internal damages in composites happen due to impact events. Moreover, this method can be used for the real-time health monitoring of composite structures.