Abstract: The rural power networks play a very important role in the power network in China. The rural networks built in the old days are usually not standardized, and therefore, a lot of problems emerged these days. Such as, most of the transmission line is aged, the insulation ability of the transmission line degraded, the household voltage is relatively low, the distribution network line loss is very high, and so on. Moreover, making some branches and connections without any order, current leakage, as well as the fire risk exist in many places, especially in the rural areas of mainland China. In order to ensure the safety of electrical power supply, the electric network retrofit for the rural areas and the remote peasant households is needed to be performed urgently. As for the rural power network retrofit and newly built projects, it is quite important to reduce the electrical power loss and keep the normal power supply voltage from the economic and reliable points of view. To keep the deviation of 380V power supply voltage within the range of -10% - 7%rated voltage, the distribution transformers are usually located in the center of the load, and economic power supply radius is required to be less than 500 m. In this respect, it is quite important to choose a reasonable location of the distribution transformer for the safety, reliability and economic operation of power networks. As the core work of power transformer planning, the distribution transformer location optimization for rural power network basically indicated the location determination of the distribution transformer according to the local economic and technical index, which had to satisfy the electricity consumption at the same time. The goal of the distribution transformer location optimization is to minimize the loss of the distribution network while ensuring the stability and reliability of power supply. The distribution transformer location optimization, which was closely related with the future electricity demand forecasting for the load point, the requirements of the distribution network planning, and the electric power system operating index, has a great influence on the economic effect of the electric power department and social effect. At present, many researches has been done on the location optimization model and the optimization algorithms of the substation, though less attention has been paid on the location optimization of the distribution transformer. Therefore, it is very urgent to carry on the studies in the field mentioned above. In Chongqing city, as the rural power network mainly distributes in hills and mountainous, the altitude of the load points has an important impact to the location of distribution transformer, at the same time, because of the existence of the sag, the length of the transmission line is not a straight-line distance. For the reasons above, the traditional optimization model used in the location of distribution transformer was modified in this paper. The line correction coefficient (α) which was connected with the sag was introduced, the line distance computational formula according to the altitude of the load points was improved, and the modified optimization model (M-TLOM) was put forward. Then, an optimized location system of distribution transformer (DTLOS 1.0) was developed based on the Visual Basic 6.0. The instance analysis indicated that the modified model could reduce the loss of distribution network.