This study investigates the damping vibration mechanism of composites using a decoupled two-scale simulation with an image-based periodic representative volume element (RVE). The parameters of the macroscopic viscoelastic constitutive law for unidirectional composites were determined using a homogenization method based on the properties of the constituent and microscale image-based periodic RVE. Using the determined viscoelastic properties, a macroscale modal simulation was conducted to predict the natural frequencies, modal damping ratios, and mode shapes of composite laminates. Then, a macroscale transient vibration simulation was performed using the calculated modal shapes and damping ratios. This simulation scheme was verified by comparing the predicted natural frequencies, modal damping ratios, mode shapes, and transient vibration responses with the experimental results. Following the homogenization simulations conducted from micro to macro scales, localization simulations were carried out from macro to micro scales to explore how microscopic deformation affects macroscopic damping properties. By utilizing both bottom-up and top-down simulations, the mechanism of vibration damping is examined by considering the microscopic structure and matrix deformation.