Abstract-Distributed generation (DG) has been placed in electrical distribution networks widely due to line loss reduction, environmental benefits, better voltage profile, postponement of system upgrading, and increasing reliability. Optimization techniques are tools which can be used for placement and sizing of the DG units in the distribution system. The impacts of DG placement issues, such as power loss minimization and voltage profile, should be analyzed effectively by proposing a method of locating and sizing DG units. This paper proposes Bacterial Foraging Optimization (BFO) algorithm technique for optimal placement of DG units in Distribution System (DS) to minimize the total real power loss, improve power factor and to regulate the voltage profile. BFO is a recently developed nature-inspired optimization technique, which is based on the foraging behavior of E. coli bacteria. To determine the validity of the BFO algorithm, a standard IEEE 69 bus radial distribution feeder system is examined with two test cases. The results show that the proposed BFO algorithm is more efficient, and capable of handling mixed integer nonlinear optimization problems effectively.