An optimal allocation method for monitoring voltage sag is proposed based on fault recognition method. The binary 0-1 matrix established by using fault recognition method is taken as the observation matrix, so as to establish the observable constraints of the sensitive load node voltage sags of whole network. Combining the weight value of the installed monitor device of each combination node, taking the least monitoring device number as the objective function, the method achieves the optimized configuration of the voltage sag monitoring device through the optimization algorithm, and a minimum number of monitoring devices are used to ensure that the whole network sensitive load node’s voltage sag is observable. In the process of establishing the observation matrix, the method uses if fault point can be uniquely identified by monitor device as the configured rules, which gets over the various problems caused by the voltage sag threshold method. Examples verify the effectiveness and practicality of the method.