Flexible ac transmission systems (FACTS) controllers are being used to damp out the power system oscillations. The effectiveness of these controllers depends on their optimal location in the power system network. A controllability index has been proposed to find the optimal location of the FACTS controllers to damp out the inter-area mode of oscillations. Three types of FACTS controllers have been considered, which include static var compensator, thyristor-controlled series compensator and unified power flow controller. The proposed controllability index is based on the relative participation of the parameters of FACTS controllers to the critical mode. A simple approach of computing the controllability indices has been proposed, which combines the linearised differential algebraic equation model of the power system and the FACTS output equations. The placements of FACTS controllers have been obtained for the base case as well as for the critical contingency cases. The effectiveness of the proposed method is demonstrated on New England 39-bus system and 16-machine, 68-bus system. © The Institution of Engineering and Technology 2007.