The integration of distributed generation (DG) into distribution networks introduces uncertainties that can substantially affect network reliability. It is crucial to implement appropriate measures to maintain reliability parameters within acceptable limits and ensure a stable power supply for consumers. This paper aims to optimize the location, size, and number of DG units to minimize active power losses and improve distribution System (DS) reliability while considering system operational constraints. To achieve this objective, multiple tests are conducted, and the particle swarm optimization (PSO) technique is implemented. The simulation studies are performed using the ETAP software 19.0.1 version, while the PSO algorithm is implemented in MATLAB R2018a. ETAP enables a comprehensive evaluation of the DG system’s performance, providing valuable insights into its effectiveness in reducing power losses and enhancing system reliability. The PSO algorithm in MATLAB ensures accurate optimization, facilitating the identification of the optimal DG unit location and size. This study uses a modified IEEE-13 bus unbalanced radial DS as the test system, assessing the effects of photovoltaic (PV) and wind DG units under various scenarios and penetration levels. The results demonstrate that the optimal DG unit location and size of either a single PV or wind DG unit significantly reduce power losses, improve DS reliability, and enable effective load sharing with the substation. Moreover, this study analyzes the impact of DG unit uncertainty on system performance. The findings underscore the potential of optimized DG integration to enhance DS efficiency and reliability in the presence of renewable energy sources.