An iterative method, called effective independence, is used to place a small number of sensors on a large space structure for identification of a set of dynamically important mode shapes. The work is important in the area of on-orbit modal identification where a very limited number of sensors will be available. The method ranks sensor locations based upon their contribution to the linear independence of the target modal partitions. Linear independence must be maintained to perform test-analysis correlation to determine the accuracy of the analytical model with respect to the test data. The derived sensor configuration maintains the spatial independence of the target modes and maximizes the determinant of the corresponding Fisher information matrix. The proposed sensor placement strategy also minimizes the size of the test data matrix used by a popular modal identification technique called the eigensystem realization algorithm. A simple numerical example demonstrates the theory. The eigensystem realization algorithm is used to extract mode shapes, frequencies, and damping from simulated response data for varying levels of noise and damping. In all cases considered, the effective independence sensor configuration accurately identified more target modes than sensor sets derived using other sensor placement techniques.