System loss factors corresponding to various shell modes have been evaluated by using a complex modulus approach. The damped free vibrations of composite cylindrical shells have been analyzed by using a first order shear deformation theory, in which one assumes a uniform distribution of the transverse shear across the thickness, compensated with a correction factor. The results indicate that the modal system loss factors are more sensitive to the various parametric changes than the frequency values. The results also show the effect of the lamination scheme on the system loss factors. An attempt has been made to interpret the various trends shown by the frequencies and loss factors in terms of the physical behavior of the shell.