Abstract: The daily line loss rate is an important factor affecting the operating error estimation of smart meters. In the existing error estimation methods of smart meters, it is assumed that the daily line loss rate is constant or proportional to the total power supply. These assumptions are usually inconsistent with the actual change law of the real daily line loss rate, which will also reduce the performance of the error estimation method of smart meters. This paper presents a joint estimation method of error and daily loss rate of smart meters based on constrained optimization model. Firstly, in order to accurately describe the energy conservation equation, a set of linear equations with the error and daily loss rate of smart meters as variables is established. Then, by analyzing the actual station data, the upper and lower bounds of the fluctuation of the smart meter error and the daily loss rate are obtained, and the constrained optimization model is constructed. Finally, according to the characteristics of the model, an efficient primordial dual algorithm is derived to iteratively find the optimal solution of the constrained optimization problem. Through the verification of the actual data, compared with the existing methods, the proposed method has a better effect on the estimation of the error and daily loss rate of smart meters.