An improved particle swarm optimization algorithm (PSO) is presented for optimal planning of multiple distributed generation sources (DG). This problem can be divided into two sub-problems: the DG optimal size (continuous optimization) and location (discrete optimization) to minimize real power losses. The proposed approach addresses the two sub-problems simultaneously using an enhanced PSO algorithm capable of handling multiple DG planning in a single run. A design of experiment is used to fine tune the proposed approach via proper analysis of PSO parameters interaction. The proposed algorithm treats the problem constraints differently by adopting a radial power flow algorithm to satisfy the equality constraints, i.e. power flows in distribution networks, while the inequality constraints are handled by making use of some of the PSO features. The proposed algorithm was tested on the practical 69-bus power distribution system. Different test cases were considered to validate the proposed approach consistency in detecting optimal or near optimal solution. Results are compared with those of Sequential Quadratic Programming. (C) 2011 Elsevier Ltd. All rights reserved.