Presence of distributed generation (DG) in distribution systems has significant impacts on the operational characteristics of these systems, also using capacitor for reactive compensation and loss reduction is so common. Injected harmonic currents from non-linear loads into distribution system distort all of voltages and currents and must be considered when placing the capacitor banks so that the resonance will not occur. In this paper discrete particle swarm optimization (DPSO) approach is used for the optimal placement and sizing of distributed generations and capacitors in distribution systems for simultaneous voltage profile improvement, loss and total harmonic distortion (THD) reduction. There is a term in the objective function which prevents harmonic resonance between capacitor reactance and system reactance. Constraints include voltage limit, voltage THD, number/ size of capacitors and generators. For evaluating the proposed algorithm, the IEEE 33-bus test system is modified and employed.