The main objective of this paper is to propose a new Finite Element (FE) model updating technique for damped beam structures. The present method consists of a FE model updating, a Degree of Freedom (DOF) reduction method and a damping matrix identification method. In order to accomplish the goal of this study, first, a sensitivity-based FE model updating method using the natural frequencies and the zero frequencies is introduced. Second, an Iterated Improved Reduced System (IIRS) technique is employed to reduce the number of DOF of FE model. Third, a damping matrix is estimated using modal damping ratios identified by a curve-fitting method and modified matrices which are obtained through the model updating and the DOF reduction. The proposed FE model updating method is verified using a real cantilever beam attached damping material on one side. The updated result shows that the proposed method can lead to accurate model updating of damped structures.