Ion current sensing is a low-cost technology that can provide a real-time feedback for the in-cylinder combustion process. The ion current signal depends on several design parameters of the sensing probe in addition to the operating conditions of the engine. To experimentally determine the effect of each of these parameters on the ion current signal, it requires modifications in the engine which would be costly and time consuming. A 3D computational fluid dynamics (CFD) model, coupled with a chemical kinetic solver, was developed to calculate the mole fraction of the ionized species formed in different zones in the fuel spray. A new approach of defining a number of virtual ion sensing probes was introduced to the model to determine the influence of sensor design and location relative to the spray axis on the signal characteristics. The contribution of the premixed and the mixing-diffusion controlled combustion was investigated. In addition, the crank angle resolved evolution of key ionization species produced during the combustion process was also compared at different engine operating conditions.