This paper gives a novel hybrid optimization method to find optimal sitting and operation of an autonomous MG at the same time. The operation is optimized via finding the optimal droop gain parameters of DGs. The optimization problem is formulated as a multi-objective problem where the objectives are applied to minimize the fuel consumption of DGs and to improve the voltage profile and stability of MG subject to operational and security constraints. A hybrid algorithm, named HS-GA, is developed to solve the paper optimization problem. A new formulation of power flow is derived to run the proposed algorithm where the steady state frequency of system, reference frequency, reference voltage and droop coefficients of DGs, based on a droop controller, are considered as optimization variables. The performance of the paper approach is compared with other optimization and non optimization methods in MG with 33 and 69 buses using MATLAB. The performance of the proposed method is compared with a method that the parameters of DGs are pre-determined without conducting any optimization process. The results show, which optimized droop parameters improves the operation of the MG. (C) 2016 Elsevier Ltd. All rights reserved.