The last decades, electric power industry is undergoing multiple changes due to the process of deregulation, providing efficient power generation, technological innovations, and eventually lower retail prices. In this environment, dynamic phenomena in power systems have made ever more urgent the development of reliable tools for their monitoring and control. An effective tool for the close monitoring of their operation conditions is the state estimator. The traditional estimators are based on real time measurements obtained through SCADA (Supervisory Control and Data Acquisition) system. These measurements are commonly provided by the remote terminal units (RTUs) installed at the high voltage substations. The phase angle of bus voltages can not be easily measured due to technical difficulties associated with the synchronization of measurements at RTUs. Global Positioning System (GPS) alleviated these difficulties and led to the development of Phasor Measurement Units (PMUs). This weakness was eliminated with the arrival of GPS, which led to the development of Phasor Measurement Units. A PMU unit, equipped with a GPS receiver, provides high accuracy voltage and current phasor measurements with respect to a common reference phase angle. In the first part of the paper, an overview of the PMU technology and a review about the optimal allocation of PMUs in power network are presented. The most important issues regarding design and operation of PMUs are discussed and an analysis of their commercial penetration in the electric energy markets is made. The second part of the paper presents a wide range of applications related with the choice of the strategic PMU placement as well as an algorithm for finding the optimal number of PMUs needed for full observability.