Active vibration suppression of a simply supported, arbitrarily thick, transversely isotropic circular cylindrical host panel, integrated with spatially distributed piezoelectric actuator and sensor layers, is investigated based on the linear three dimensional exact piezo-elasticity theory. To assist control system design, system identification is conducted by applying a frequency domain subspace approximation method based on N4SID algorithm using the first few structural modes of the system. The state space model is constructed from system identification and used for state estimation and development of control algorithm. The optimal electrode configuration for the collocated piezoelectric actuator-sensor pair is found by applying a genetic optimization procedure based on maximization of a quantifiable objective function considering the controllability, observability and spillover prevention of the identified system. A linear quadratic Gaussian (LQG) optimal controller is subsequently designed and simulated based on the identified model of optimally configured smart structure in order to actively control the system response in both frequency and time domains. The dynamic performance and effectiveness of the optimized vibration control system is demonstrated for two different types of external mechanical excitations (i.e., impulsive load and white noise disturbance). The accuracy of dynamic analysis is established with the aid of a commercial finite element package and the data available in the literature.