Abstract: sm-TMSR is a small modular multi-purpose thorium-based molten salt demonstration reactor designed by Center for Thorium Molten Salt Reactor System (TMSR), CAS. In this paper, the physical analysis of the control rod arrangement was carried out. Firstly, we analyzed the unique reactivity variation in the molten salt reactor and proposed the function and requirements of the control rods. Namely, for regulating rods, the total design value is required to be equal to or slightly greater than 2.5×10^-2 at the beginning of life and 2.06×10^-2 at the end of life, respectively. For shut-down rods, "one stuck rod" criterion is considered, and the design value of a single rod is required to be more than 2.1×10 ^-2 at the beginning of life. Secondly, we calculated the value of the single control rod at different locations in the core, for different size of the channel and the channel with or without a Hastelloy sleeve. Finally, according to the requirements of control rods, the optimized physical design of the control rod assembly in the core is determined, i.e, a. Diameter of channels in control rod assemblies are 9 cm, and it is without Hastelloy sleeve; b. Four control rods are distributed in the shape of "十", two shut-down rods are uniformly arranged in the first circle and two regulating rods are uniformly arranged in the sixth circle of the core.