This study introduces a novel approach for locating damage in a structure using wireless sensor system with local level computational capability to alleviate data traffic load on the centralized computation. Smart wireless sensor systems, capable of iterative damage-searching, mimic an optimization process in a decentralized way. The proposed algorithm tries to detect damage in a structure by monitoring abnormal increases in strain measurements from a group of wireless sensors. Initially, this clustering technique provides a reasonably effective sensor placement within a structure. Sensor clustering also assigns a certain number of master sensors in each cluster so that they can constantly monitor the structural health of a structure. By adopting a voting system, a group of wireless sensors iteratively forages for a damage location as they can be activated as needed. Since all of the damage searching process occurs within a small group of wireless sensors, no global control or data traffic to a central system is required. Numerical simulation demonstrates that the newly developed searching algorithm implemented on wireless sensors successfully localizes stiffness damage in a plate through the local level reconfigurable function of smart sensors.