Taking selected examples from research on advanced composites, e.g., piezo-fiber or nano-modified composite laminates at Empa's Laboratory for Mechanical Systems Engineering, prospects for and problems in developing integrated Structural Health Monitoring systems or "smart" composite structures will be highlighted and discussed. The examples emphasize that extensive characterization at materials, component and system level and respective test and analysis developments are required. It is further argued that technological developments have to be based on a conceptual framework with clearly defined objectives for a successful structural design. Crucial steps are the implementation of laboratory-scale demonstrators operating under laboratory-conditions into real-scale structures operating under real service conditions in a complex environment while simultaneously considering economic feasibility.