Many measurement methods are considered to return point values of volumetric water content, water pressure, or other hydrologically relevant properties. However, many methods have spatially distributed measurement sensitivities, averaging a property of interest over some sample volume. In this investigation, we study the effects of the spatially distributed measurement sensitivity of time domain reflectometry (TDR) on the inversion of hydraulic properties from water content measurements. Specifically, a numerical analysis of the water breakthrough curves that would be measured by TDR probes of varying designs during the advance of a wetting front is presented. Numerical inversion of these water breakthrough curves is performed to estimate the soil hydraulic parameters. Time domain reflectometry probes with larger rod separations show less impact on the flow of water at the wetting front. However, these probes have more widely distributed spatial sensitivities, leading to more smoothing of the observed water breakthrough curve. The TDR-measured wetting front shape is more distorted for vertically emplaced probes than for horizontal probes. The optimal TDR probe configuration for inversion of hydraulic parameters from measurements recorded during the advance of a vertical wetting front has three closely spaced rods that lie in a common horizontal plane. The inversion results using this design show close agreement with known values and very small 95% confidence intervals of the inverted properties. This specific recommendation cannot be adopted generally for all TDR monitoring applications. Rather, we recommend that a similar analysis be performed for each specific monitoring application. While the results presented are specific to TDR responses, the same consideration should be given to all instruments with spatially distributed sensitivities.