The location selection of sensors in large-scale swarm systems is a prerequisite for further design of mechanisms to monitor the system states. This paper considers the required number and location of the sensors in a largescale swarm system so that the observability of the overall system is satisfied. Firstly, by extending observability theory for swarm systems, some necessary and/or sufficient observability conditions related to the node-dynamics, network topology, coupling mode and measured outputs are obtained. Secondly, based on the above observability conditions, an algorithm for deciding how many and where to place the sensors is designed, which can be implemented in a polynomial complexity time. Finally, an unmanned aerial vehicle (UAV) swarm system is employed to verify the effectiveness of the theoretical results.