Summary In real case of distribution systems with several directional overcurrent relays, the designer is facing an optimization problem with an extensive search space of discrete values. Finding the optimal solution to such a problem is a time‐consuming task with big chance of nonconvexity. In this paper, the optimal coordination of directional overcurrent relays in distribution systems is modeled by attempting the practical issues, that is, full discrete variables for time‐current curve, time multiplier setting, and plug setting. To reduce the calculation time, the problem is solved by using a novel method based on network splitting. The problem is solved in two stages: the first one finds the optimal solution for the subnetworks individually and the second one determines the optimal setting for the relays on the tie lines connecting the subnetworks. It is shown that the proposed method improves the relays' operating times and also reduces the chance of nonconvexity of the problem. By applying the proposed method to the 30‐bus Institute of Electrical and Electronics Engineers test system, the results are compared with the conventional algorithms. It is found how the practical issues related to the relay characteristics selection can affect the overall relays' time. Also, the computation time is considerably reduced with network splitting method presented in this paper. Copyright © 2014 John Wiley & Sons, Ltd.