The technology of hardware-in-the-loop simulations (HILS) plays an important role in the design of complex systems, for example, the structural health monitoring (SHM) of aircrafts. Due to the high performance of personal computers, HILS can provide practical solutions to many problems in engineering and sciences, especially in the huge systems, giant dams for civil engineering, and aircraft system. This study addresses the HILS in hole/crack identification in composite laminates. The multiple loading modes method is used for hole/crack identification. The signals of strains measured from the data-acquisition (DAQ) devices are accomplished by the graphical software LabVIEW. The results represent the actual responses of multiple loading mode tests of real specimens. A personal computer is employed to execute the identification work according to the strain data from DAQ devices by using a nonlinear optimization approach. When all the criteria are satisfied, the final identification results will be obtained. HILS will achieve real time identification of hole/crack in the composite plate by using the actual response measured from the sensors. Not only the size, but also the location and orientation of the crack/hole in a composite plate are successfully identified herein.