The aim of this work is to propose a procedure for online structural health monitoring of a double curvature arch dam structure using combination of the extended finite element model (XFEM) based on cohesive crack model (XFEM based cohesive crack segments) and continuous Wavelet transform (CWT). In this way, the Karun 3 dam, one of Iranian under operation arch dam, is numerically modeled and analyzed using the finite element method (FEM) and XFEM based cohesive crack segments respectively, and the dam is analyzed under the seismic excitation. The XFEM based cohesive crack segments for concrete material as a reliable model is used for investigating real responses of Karun 3 concrete dam against applied loads and damages. In this model, whole of the structure is potentially under damage risk, while there is no initial crack. Then, for specification of crack effects and nonlinear behavior, the structural modal parameters and their variation should be investigated based on structure response for obtaining damage initiation time and its location by using system identification based on CWT. Results show the high ability of proposed procedure, in spite of difficulties arising from input effect, modal interference and choosing reference point effectiveness on modal shapes. By using analysis of the procedure results, the history of physical changes occurred in the structure and cracking initiation time from investigating time-frequency window of the structure response and exact location of crack from comparing the intact and damaged crest and central cantilever vibration modes are made possible.