This research presents an accurate comprehensive cost function for the problem of optimal location of subtransmission substations. Technical constraints and economical parameters are investigated in the modeling. Genetic algorithm is used to optimize the cost function. Coding of decision variables is done in a way that finding the correct solutions is achieved faster. For the first time in this study, free capacity of medium voltage distribution feeders is used for optimal location of subtransmission substations. Also cost of coupling to upward grid in candidate substations with considering different levels of subtransmission voltage is presented. Efficiency of the proposed algorithm is evaluated via several case studies