Abstract This paper describes an analytical methodology for reliability evaluation and enhancement of distribution system having distributed generation (DG). Standby mode of operation of DG has been considered for this purpose. Reliability of the composite distribution system has been optimized with respect to failure rate and repair time of each section of the distribution system subject to constraints on (i) failure rates/ repair times and (ii) customer and energy based reliability indices i.e. SAFI, SAIDI, CAIDI and AFNS. The objective function includes (i) cost of modification for failure rates/repair times (ii) additional cost of expected energy supplied by DG. Differential evolution (DE), Particle swarm optimization (PSO) and co-ordinated aggregation based PSO (CAPSO) have been used to develop computational algorithms. Developed algorithms have been implemented on a sample distribution system.