The Modal Strain Energy Method (MSEM) is widely used in practice for the prediction of damping levels in structures. MSEM is based on a fundamental assumption that the damped and, the undamped mode shapes of a structure are identical. Therefore, when MSEM is to be used, it is essential to ensure that this assumption is an acceptable assumption. However, detailed information on the accuracy of the method as a function of the system parameters including modal (or mode shape) complexity is quite limited In this paper, the performance of MSEM is assessed in terms of the damping levels of the structure, proportionality of damping distribution and/or the modal complexity. To do so, an effective finite element based MSE approach is proposed first. Then, a proportionally damped structure with different damping levels is modeled and the performance of MSEM is assessed as a function of the structural damping level. After that, a non-proportionally damped structure is studied in order to examine the performance of the method with respect to mode shape complexity. In all cases, a more accurate reference method, based on complex eigenvalue approach, is used for comparison purposes. Furthermore, a few definitions of mode shape complexity are utilized in order to quantify the mode shape complexity. The results show that as long as the mode shapes are real or close to being real, MSEM can predict the damping levels as well as the natural frequencies of a damped structure with good accuracy. However, the accuracy that can be achieved with MSEM decreases as mode shape complexity increases.