Hazardous materials (hazmat) cars are subject to differing probabilities of being involved in a derailment depending on their position in trains. For decades there has been discussion and debate about whether operating practices and regulations should account for this to reduce the chance of railcars carrying hazmat being involved if a train derails. This paper presents a new, position-dependent, railcar-based method to systematically analyze derailment probability of hazmat cars and identify optimal placement strategies that minimize the expected number of hazmat cars derailed. This new method iteratively accounts for train makeup, derailment speed, train length, and the fraction of hazmat cars in the train. A case study based on realistic train configurations and operational conditions with a sensitivity analysis is presented. The results indicate that there is no single placement strategy that minimizes hazmat car derailment probability under the variety of operational characteristics typical of North American freight train operation. This has implications for rail hazmat transportation safety, operations, efficiency, and regulatory policy. This research advances our understanding of the effect of hazmat car placement on operating safety and risk and enables development of holistic quantitative models to address the trade-off between hazmat train operating safety and efficiency that accounts for both mainline derailment severity and yard activities related to train make-up.