Blade tip timing (BTT) is a noncontact method for measuring turbomachinery blade vibration. Proximity sensors are mounted circumferentially around the turbomachine casing and used to measure the tip displacements of blades during operation. Tip deflection data processing is nontrivial due to complications such as aliasing and high levels of noise. Specialized BTT algorithms have been developed to extract the utmost amount of information from the signals. The effectiveness of these algorithms is, however, influenced by the circumferential spacing between the proximity sensors. If the spacing is suboptimal, an algorithm can fail to measure dangerous blade vibration. This paper presents a novel optimization approach that determines the optimal spacing between proximity sensors.