Abstract: The loss reduction and energy saving of the distribution network is one of the most important issues to be concerned in the power industry all the time in the world. With the increased penetration of distributed generation (DG), there is a new opportunity for the problem of loss reduction and energy saving in distribution network at present. This paper studied the power loss reduction method by the configuration of the DG in the radial distribution network. From the simple radial distribution network with symmetrical load, this paper made further efforts to research on the problem of loss reduction in the actual network. First of all, without considering the penetration maximum capacity constraints of DG to be connected to a distribution network, and under the conditions of symmetrical load flow in the simple network, the mathematical models of current flow were established, the algorithm expression of the network loss reduction was determined after the DG configuration. Then, according to the rule of the clearest effect of power loss reduction after the DG configuration, the ‘2/3 principle’ was determined to configure the DG in the simple radial network. As to the actual radial distribution network with asymmetrical load flow, the algorithms of the branch current and the power loss were given firstly. And then, according to the ‘2/3 principle’ to determine the initial configuration point of DG, and under the constraint conditions of power balance, node voltage, transmission power, and DG capacity restriction, on the basis of load average power factor as the benchmark, the DG size and site was conformed by the minimum loss principles of the actual radial distribution network. The method proposed was applied to a real 10 kV distribution network, based on the data of the network in 2009, the DG was configured in the network, and the related calculation and analysis was implemented by the method given in this paper. By calculation, analysis and comparison, the results showed that the loss was significantly reduced under the different load conditions for used the method of this paper, and the voltage quality was obviously improved. By the proposed method in this paper, it is good to realize the goal of the loss reduction and energy saving in the distribution network effectively, and it is beneficial to improve the voltage. What’s more, it is very easy to use in the actual distribution network, and a new method is provided for energy saving and power loss reduction of the distribution network.