Abstract: The distributed generation connected to the microgrid is a key way to balance power supply and demand and to reduce the loss of long distance transmission. The capacity selection of distributed generation in microgrid affects the reliability and economy of power supply. Reasonable capacity of distributed generation is an important part to the efficient and reliable system operation. Based on these points, some research are taken in this article. First, boundary constraints are carried out for the capacity of the distributed generation, which are determined by the rated working current of the line, the upper transformer capacity and the load capacity. Then, based on the consideration of power supply with reliability and economy, the upper and lower capacity limits are further optimized. Finally, based on the hardware dynamic simulation platform, the analysis of microgrid with multiple distributed generations is carried out.