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Traffic sensors serve as an important way to a number of intelligent transportation system applications which rely heavily on real-time data. However, traffic sensors are costly. Therefore, it is necessary to optimize sensor placement to maximize various benefits. Arterial street traffic is highly dynamic and the movement of vehicles is disturbed by signals and irregular vehicle maneuver. It is challenging to estimate the arterial street travel time with limited sensors. In order to solve the problem, the paper presents travel time estimation models that rely on speed data collected by sensor. The relationship between sensor position and vehicle trajectory in single link is investigated. A sensor location model in signalized arterial is proposed to find the optimal sensor placement with the minimum estimation error of arterial travel time. Numerical experiments are conducted in 3 conditions: synchronized traffic signals, green wave traffic signals, and vehicle-actuated signals. The results indicate that the sensors should not be placed in vehicle queuing area. Intersection stop line is an ideal sensor position. There is not any fixed sensor position that can cope with all traffic conditions. [ABSTRACT FROM AUTHOR]