This paper presents multi-objective function for optimally determining the size and location of distributed generation (DG) and capacitor in distribution systems for power loss minimization, reliability and voltage improvement. The objective function proposed in this paper includes reliability index, active power loss index, DG's and capacitor's investment cost index and voltage profile index which is minimized using binary particle swarm optimization algorithm (BPSO). The effectiveness of the proposed method is examined in the 10 and 33 bus test systems and comparative studies are conducted before and after DG and capacitor installation in the test systems. Results illustrate significant losses reduction and voltage profile and reliability improvement with presence of DG unit and capacitor.