The Navy is incorporating composite materials into its next generation missiles. However, for this to be a viable method, they need methods for inspecting these composite missiles if they suffer impacts during handling. The Navy’s current requirements call for a portable system that can be hand-held by the operator to inspect a missile after impact damage may have occurred. Since this system will most likely be used in deployed environments with limited space and control over the environment, the inspection system must be small and not require specialized mounting hardware or jigs. We are extending our existing shearography based non-destructive inspection system, which has already been shown to be capable of finding impact damage in composites, with motion compensation software to develop a new handheld shearography device that is tolerant of the vibrations inherent in a hand-held device. Traditional shearography systems must be kept on a rigid mount to remove these undesirable vibrations.