This paper intends to enumerate the impact of distributed generation (DG) on distribution system in terms of active as well as reactive power loss reduction and improved voltage stability. The novelty of the method proposed in this paper is the simple and effective way of sizing and siting of DG in a distribution system by using two-port Z-bus parameters. The validity of the method is verified by comparing the results with already published methods. Comparative study presented has shown that the proposed method leads existing methods in terms of its simplicity, undemanding calculation procedures, and less computational efforts and so does the time. The method is implemented on IEEE 69-bus test radial distribution system and results show significant reduction in distribution power losses with improved voltage profile of the system. Simulation is carried out in MATLAB environment for execution of the proposed algorithm.