This paper proposes the development of intelligent sensors as an integrated systems approach, i.e. one treats the sensors as a complete system with its own sensing hardware (the traditional sensor), A/D converters, processing and storage capabilities, software drivers, self-assessment algorithms, communication protocols and evolutionary methodologies that allow them to get better with time. Under a project being undertaken at the Stennis Space Center, an integrated framework is being developed for the intelligent monitoring of smart elements. These smart elements can be sensors, actuators or other devices. The immediate application is the monitoring of the rocket test stands, but the technology should be generally applicable to the Intelligent Systems Health Monitoring (ISHM) vision. This paper outlines progress made in the development of intelligent sensors by describing the work done till date on Physical Intelligent Sensors (PIS) and Virtual Intelligent Sensors (VIS). Copyright © 2005 by ASME.