This paper presents a critical study on the sensing characteristics of piezoelectric fiber composite transducers (PFCTs), in order to evaluate them as an effective embedded sensor inside the composite structures to monitor the stress/strain concentration levels at the critical locations. The functions of PFCT as an embedded sensor inside the composite structure are threefold: (i) to detect all loading conditions acting on to the structure, (ii) to predict the occurrence of damage while in-service under dynamic loads, and (iii) to monitor the pre-existing damages in the composite structures so that the severity can be ascertained to avoid eventual catastrophic or brittle failures. PFCT will be an ideal choice for composite structures applications, as they are highly flexible, easily embeddable; their high compatibility to the composite manufacturing techniques, and more importantly, it is expected that they will produce significantly less interfacial stresses when embedded inside the composite structures.Two types of PFCTs (macro fiber composite (MFC – from Smart Materials Corp.), and piezoelectric fiber composite (PFC – from Advance Cerametrics Inc.)) have been selected and calibrated by investigating their sensor performances based on characteristics; like transfer function, sensitivity, nonlinearity, resolution, and noise levels. Dynamic loads (transverse and longitudinal) have been applied and their corresponding output response is evaluated. The sensitivity of these products to the changes in frequencies and strain levels of input dynamic loads is investigated through the constant strain and frequency curves. Healthy voltage output response is observed even at low strain level domains, which indicates their high sensitivity and high resolution as a sensor. Comparing the results, it can be concluded that these sensors demonstrated their superior sensitivity and better performance over the traditional strain gauges. After a detailed sensor performance assessment, a case study has been conducted on the composite beam structure, where the ability of the PFCTs to detect the delamination of various levels inside the composite beam structure through modal analysis has been investigated. Then tests were performed to investigate the ability of the embedded PFCT sensors to detect the changes in the applied input mechanical stress/strain when embedded inside glass fiber–epoxy composite laminate samples. It is found that these sensors are effectively able to detect the changes in the applied input mechanical stress/strain. A linear relationship has been observed between the applied input mechanical stress and the sensor generated voltage output.