An inferential sensor is a computer program used for inferring the process variables, which are very hard to measure from the available measurement data. Measurement noises can affect the quality of the data which can be improved by wavelet denoising method. The objective of this paper is to design an inferential sensor for estimation of Benzene concentration in a typical distillation column. Selection of the most relevant input variables for estimation can improve the performance of inferential sensor which is done by Principal Component Analysis (PCA) technique. In this paper an inferential sensor is proposed based on a novel modification of the nearest neighbor distance-based clustering for developing a TakagiSugeno-Kang (TSK) fuzzy model optimized by the Particle Swarm Optimization (PSO) algorithm. The proposed technique was compared against the conventional nearest neighbor distance-based clustering approach optimized by PSO. The simulation results confirm that the designed inferential sensor based on the proposed method is more accurate even for a noisy data set.