In this research, based on the three-dimensional theory of elasticity, free vibration analysis of the functionally graded (FG) cylindrical shells with piezoelectric layers, is performed. The piezoelectrics layers are placed on inner and outer surfaces of functionally graded shells so that form three-layer cylindrical shells. Piezoelectrics are one of the most useful types of smart materials and can be used as sensor, actuator, transducer and even generator. In this research inner piezoelectric layer has sensor role and the outer one used as an actuator. The shell is subjected to thermal environment. FGMs are designed so that their thermo-mechanical properties have smoothly and continuously spatial variation due to a continuous change in composition, in morphology, in microstructure, or in crystal structure. FGMs can take the advantage of the desirable properties as thermal and corrosion resistance of ceramics and high tensile strength, toughness and bonding capability of metals. The material properties of the FG layer are assumed to be temperature dependent and graded in the radius direction, which can vary according to a simple power low distribution. Thermal effects on the piezoelectric layers are considered too. It is assumed that heat transfer is only in the radial direction. Mechanical boundary conditions are considered as clamped-clamped and clamped-free, thermal conditions considered as constant temperature at inner surface and constant convection heat transfer at the outer one. The mechanical and thermal boundary conditions leads to initial stresses in the shells. The initial thermal stresses are affect the vibration characteristics of the shells and in order to calculate these stresses, the temperature distribution in the shell should be determined firstly by solving the steady state one-dimensional heat transfer equation. Then these stresses are obtained by solving the thermoelastic equilibrium equations. The governing Equations of the free vibration, which include the effects of the initial thermal stresses, are derived by using Hamilton's principle. The Generalized Differential Quadrature (GDQ) as an efficient and accurate numerical tool is used to solve the thermal and thermo-mechanical governing equations. The effects of temperature dependence of material properties, geometrical parameters, material graded index, thermal and mechanical boundary conditions on the frequency ratio of the functionally graded cylindrical shells without and with piezoelectric layers are carried out. It is shown that with increasing the each of length to mean radius ratio, mean radius to thickness ratio, thickness of piezoelectric layer to thickness of FGM layer ratio, power low index and thermal condition, the frequency ratio is reduced. In addition, at the other similar conditions, the frequency ratio of the shells in the clamped-clamped boundary condition is greater than that in clamped-free boundary condition. K eywords: Free vibration, Shell, FGM, Piezoelectric, GDQ