Atime-domain System Identification (SI)-based Structural Health Assessment (SHA) procedure using Extended Kalman Filter (EKF) concept is presented in another paper. Unscented Kalman Filter (UKF) concept is presented in this paper. Both procedures can be used to assess health of existing or newly built structures exhibiting nonlinear behavior. To apply these procedures, the structures are represented by finite elements. The locations and the rates of degradation of the elements are tracked to assess the structural health. Both EKF and UKF-based formulations are expected to assess health for nonlinear structures. Since the mathematical formulations are different, their application potentials to identify health of structures with different types of nonlinearities are expected to be different. The most important attribute of the UKF-based procedure is that it will not require the linearization of nonlinear responses as required by the EKF-based procedure.A comparative study of the two procedures is presented in this paper. It is shown that one method may be superior to the other to assess structural health in the presence of different defect scenarios and associated nonlinearities.