Modern society faces serious problems with transportation systems, including but not limited to traffic congestion, safety, and pollution. Information communication technologies have gained increasing attention and importance in modern transportation systems. Automotive manufacturers are developing in-vehicle sensors and their applications in different areas including safety, traffic management, and infotainment. Government institutions are implementing roadside infrastructures such as cameras and sensors to collect data about environmental and traffic conditions. By seamlessly integrating vehicles and sensing devices, their sensing and communication capabilities can be leveraged to achieve smart and intelligent transportation systems. We discuss how sensor technology can be integrated with the transportation infrastructure to achieve a sustainable Intelligent Transportation System (ITS) and how safety, traffic control and infotainment applications can benefit from multiple sensors deployed in different elements of an ITS. Finally, we discuss some of the challenges that need to be addressed to enable a fully operational and cooperative ITS environment.