This paper proposes the hybrid sequential quadratic programming (SQP) technique based on active set method for identifying the optimal placement and rating of distribution generation (DG) incorporated in radial distribution systems (RDS) for minimizing the real power loss satisfying power balance equations and voltage limits. SQP runs quadratic programming sequentially as a sub-program to obtain the best solution by using an active set method. In this paper, the best optimal solution is selected with less computation time by combining the benefits of both classical and meta-heuristic methods. SQP is a classical method that is more sensitive to initial value selection and the evolutionary methods give approximate solution. Hence, the initial values for the SQP technique were obtained from the meta–heuristic method of Parameter Improved Particle Swarm Optimization (PIPSO) algorithm. The proposed hybrid PIPSO–SQP method was implemented in IEEE 33-bus RDS, IEEE 69-bus RDS, and IEEE 118-bus RDS under different loading conditions. The results show that the proposed method has efficient reduction in real power loss minimization through the enhancement of the bus voltage profile. © 2020 by the authors. Licensee MDPI, Basel, Switzerland.