A method of simulation is developed for studying the dynamics of the structures with discontinuities using Matlab-Simulink. Simulation and experiments were performed to analyse the nonlinear behaviour of the cracked bar. It is found that the crack-induced nonlinearity leads to the generation of higher harmonics along with side band frequencies. Their intensity diminishes with increase in distance of measurement from the crack. The presence of sideband frequencies indicates modulation of exciting frequency due to systematic interaction of crack faces. The nonlinear transformation of modulated vibration by crack leads to generation of a low frequency periodic component. Its amplitude is proportional to the forced response of the cracked bar at the exciting frequency. The phenomenology described here can be effective for Structural Health Monitoring (SHM).