We develop a new location verification system (LVS) focused on network-based intelligent transport systems (ITSs) and vehicular ad hoc networks (VANETs). The system that we develop is based on an information-theoretic framework in which the mutual information between the system's input and output data is maximized. Our system takes as inputs a user's claimed location and base station (BS) received signal strength (RSS) measurements to form an optimal decision rule on the legitimacy of the claimed location. The scenario that we consider is where a noncolluding malicious user alters his transmit power in an attempt to fool the LVS. We develop a practical threat model for this attack scenario and investigate the performance of the LVS in terms of its input/output mutual information. We show how our LVS decision rule can be straightforwardly implemented with a performance that delivers near optimality under realistic threat conditions. The practical advantages that our new information-theoretic scheme delivers, relative to more traditional Bayesian verification frameworks, are discussed.