This paper presents the results of characterization of damage in polymer composite materials that are in: a) the pristine state, b) subjected to low velocity impact and c) fatigue damaged after impact using x-ray computed tomography (CT) technique. While CT imaging provides excellent details about the presence of the damages, the interpretation of defect size is dependent on setting up of threshold of measurement and intelligent interpretation of data received from the images to ensure proper quantification of damage. It is noted that the selection of pixel intensity (grey value) for thresholding in the quantification of defects through digital image analysis can influence the results in a significant manner. The specimens at different physical conditions in terms of damage or defects imparted by manufacturing method, different loading conditions, etc. were analyzed. The study arrives at the statistical criteria for choosing the right threshold level for image processing for reliable and accurate damage quantification in fiber reinforced polymeric composites. The damage caused to the specimens due to impact as well as post-impact fatigue loading is also estimated.