This article reports recent developments in the area of smart sensors. The evolution of these devices is reviewed and motivations for the introduction of new high-performance sensors are discussed. The structure, characteristics, and functions of the smart sensors with some integrated intelligent ability are presented. Fiber-Optic smart structure, and chemical smart sensing materials are described. Organization and operation of a typical smart sensor with distributed sensing nodes are discussed. Problems in industrial applications are investigated, and some hints are given in order to realize the full impact of such sensors at the system level.