Power losses in distribution system have become the most concerned issue in power losses analysis in any power system. In the effort of reducing power losses within distribution system, reactive power compensation has become increasingly important as it affects the operational, economical and quality of service for electric power systems. This paper presents the application of genetic algorithm approach for reactive power loss reduction in radial distribution system. IEEE 34-bus Standard Test System is used together with the ERACS and MATLAB as powerful tools for the analysis and simulation work. ERACS is used to perform load flow analysis while MATLAB is used for the identification of capacitor current via GAtool, and algorithm for the calculation of loss savings, its particular capacitor size and location. The result is then compared with the heuristic search strategies to evaluate the performance of genetic algorithm. © 2006 IEEE.