The integration of actuators and sensors using smart materials enabled various applications including health monitoring and structural vibration control. In this study, a robust control technique is designed and implemented in order to reduce vibration of an active structure. Special attention is given to eliminating the possibility of interaction between the health monitoring system and the control system. Exploiting the disturbance decoupling characteristic of the sliding mode observer, it is demonstrated that the proposed observer can eliminate the possible high frequency excitation from the health monitoring system. At the same time, a damage identification scheme, which tracks the changes of mechanical impedance due to the presence of damage, has been applied to assess the health condition of structures. The main objective of this paper is to examine the potential of combining the two emerging techniques together. Using the collocated piezoelectric sensors/actuators for vibration suppression as well as for health monitoring, this technique enabled to reduce the number of system components, while enhancing the performance of structures. As an initial study, both simulation and experimental investigations were performed for an active beam structure. The results show that this integrated technique can provide substantial vibration reductions, while detecting damage on the structure at the same time.