Now- a — days loss reduction and voltage regulation has become a major issue in Radial Distribution systems. Many loss reduction techniques have come into existence. Many distribution companies all over the world employ fixed capacitors. With increase of load that may not be sufficient for required voltage regulation. In such conditions further improvement in voltage and loss reduction can be achieved using distributed generators without removing the capacitors in the system. DG s are very much beneficial in reducing the losses effectively compared to other methods of loss reduction .In this paper optimal capacitors and DG unit placement using fuzzy logic is discussed. The optimal size of the capacitors and DG unit is calculated analytically Using approximate reasoning suitable nodes are determined for capacitor and DG unit placement.  Voltage and power loss reduction indices of distribution system nodes are modeled by fuzzy membership functions. Fuzzy inference system containing a set of rules is used to determine the capacitor and DG unit placement .First capacitor units are placed with the highest suitability index ,over all system performance is observed. Again same procedure is repeated to find the highest suitability index to place the DG unit. Simulation results show  the improvement of  voltage profile and loss reduction with optimal capacitor  unit placement and optimal DG unit placement .