SUMMARYThe control performance of wireless networked control systems (WNCS) has been shown to heavily depend on the packet delivery quality of both the sensor‐to‐controller and controller‐to‐actuator communications. Such quality relies on the relative distance between the wireless transmitter and receiver, which naturally raises the challenging problem of controller placement in WNCS for optimal control performance. In this paper, we investigate the optimal controller location (OCL) problem in WNCS based on linear‐quadratic‐Gaussian control strategy. For the one‐hop network case where the controller can only be placed at either the sensor side or the actuator side, we derive a simple yet effective criterion to determine the OCL. For the more general multi‐hop case where the controller can be located at either one of the sensors, relays, or actuators, we obtain the necessary and sufficient condition under which the closed‐loop system is guaranteed to be stable. On the basis of these results, we further transform the OCL problem into an optimization problem that can be solved efficiently. Numerical results are provided to verify our analysis. Copyright © 2013 John Wiley & Sons, Ltd.