Defects in underground pipes are detected by applying Gabor transforms on experimental guided wave signals and comparing the experimental group velocity plots with the theoretical group velocity dispersion curves. Gabor transform, which is a powerful signal processing tool, maps a signal into a two-dimensional space of time and frequency. Thus it provides information about both when and at what frequency a signal arrives. Focus of this paper is to study the applicability of cylindrical guided waves to detect defects in underground pipes using Gabor transform. Cylindrical guided waves are generated by piezo-electric transducers. Guided waves are propagated through pipes that are buried in the soil by placing transmitters on one end of the pipes and the receivers on the other end. The recorded signals are then processed using 2-D Gabor Transform or Short Time Fourier Transform (STFT). Gabor transform converts the timeamplitude signal into a time frequency signal which reveals the group velocities hidden in the signal. These experimentally obtained group velocities are then compared with the theoretical velocities for cylindrical pipes embedded in the soil. From the comparison of the theoretical and experimental group velocities, an effort has been made to identify which modes are propagating through the embedded defective pipes and which modes are having difficulty to propagate through the defective pipe wall. From this knowledge pipe wall defects can be detected.