Electrical energy plays a vital role in the socio-economic development of a nation. Distributed Generation (DG) integration in electrical distribution system represents a reliable option to combat for the power system profile major problems of distribution companies, such as load growth, overloaded lines, quality of supply and reliability. There is a need to improve the technical benefits of DG integration by optimal Siting and sizing in a power system network. These benefits can potentially defer the investments to be made to upgrade the assets of the distribution system, extend equipment maintenance intervals, reduce electrical power losses, and improve the voltage profile and reliability of the distribution system. Moreover, it has been proven that the additional benefits brought by DG could be substantial if it is optimally placed and sized in the distribution network. The major problems deal in this thesis is the existence of high real power losses and poor voltage profiles. The objective of the thesis is for active power loss reduction and voltage profile improvement in case of Bahir Dar distribution network by using DGs. To achieve the objective, an improved Particle swarm optimization (IPSO) based methodology has been used to allocate and sizing of DGs at the appropriate location(s) along the feeder of weakest candidate buses of the system decided by loss sensitivity and power flow analysis. The IPSO algorithm is programmed in MATLAB R2016b software and to check its effectiveness standard IEEE 33-bus test system is used by considering renewable DG, proving that the technique is effective, and it has been observed that the IPSO method used in the case area is more efficient. The percentage reduction in real power loss was 55.73%, 73.1% and 54.098% while the percentage of reactive power loss reduction was 55.102%, 73.46% and 57.14% for type 1, type 2 and type 3 DGs respectively. The voltage profile was generally improved with lowest bus voltages of 0.95 p.u in all the three cases.