This paper concerns design methods of optimal placement for locating sensors and actuators on flexible beams. Recently, modern control theory, which is based on the LQ control or H∞ control theory, has been applied to control the vibration of flexible strutures. However, most of reports are concerned with model reduction and spillover problems, but few reports have discussed whether located sensor/actuator of the flexible structures are suitably placed for the designed controller. Therefore, it is necessary to consider optimization through the entire design procedure including sensor/actuator placement. In this paper an iterative algorithm is proposed to search for the optimal sensor/actuator placement for stabilization of flexible beams. This method is based on the steepest descent techniques using sensitivity analysis and output feedback control. It is shown that the system controlled by the proposed method improves closed-loop performance in frequency domain,