The objective of this work is twofold. First, the influence of confined vibrations on the sensor and actuator optimization is determined and evaluated. Second, a preliminary design methodology to incorporate confined vibration response in the design stage of the sensor/actuator arrays used in smart structures is introduced. In this paper, the influence of confinement on the performance and optimal location of the sensor/actuator sets is evaluated based on two different optimization criteria. The first criterion is based on a specified performance index related to the observability and controllability grammians of the sensors and actuators, respectively. The second criterion is based on the energy dissipated through collocated sensor/actuator sets. Three types of structural components, beam, plate, and cylinder, are evaluated. Theoretical results are verified by laboratory tests conducted on all three structural components. The preliminary results of this work clearly show that vibrational confinement has a significant effect on the performance and position optimization of sensors and actuators. The proposed modified optimization procedure and design methodology are proven to be effective in addressing certain issues. It is concluded that the unintentional occurrence of confined vibrations may be detrimental to vibration control systems. On the other hand, one may take advantage of the intentional presence of confined vibrations in a structure to reduce the error in the optimal locations of sensors and actuators and optimize their performance by focusing the control effort on the confined areas.