Optimization of a sensor location for effective characterization of a hot forging process using acoustic emission (AE) signals is discussed in this paper. Acoustic emission signals generated during forging operations on an aluminium alloy were recorded using three sensors simultaneously by mounting them on the top bolster, bottom bolster, and bottom die of the press. The AE signals with maximum sensitivity could be detected with a sensor attached to the bottom die in preference to the other positions. Using AE parameters, the forging process could be differentiated into three regions, i.e., 1) yielding of the workpiece material, 2) intermediate deformation region, and 3) filling of the die. The results show that the optimum position of the AE sensor for monitoring hot forging is found to be the bottom die of the forging press.