Traditional 0.4 kV direct distribution mode cannot meet the energy conservation and transmission efficiency requirements of both close and distant loads. For this problem, this paper proposes a distribution voltage selection method based on two-stage transformation mode. This method takes three-winding transformer as distribution transformer to output two different voltage levels. The level 0.4 kV delivers power directly to the close loads, while the voltage level higher than 0.4 kV distributes power by two-stage transformation mode to the distant loads that cannot meet the supply radius and capacity requirements of 10 kV. It combines Life Cycle Cost (LCC) with loss reduction benefit as the objective function. With the reliability and power quality constraints, this method can figure out the best distribution mode and the proper distribution voltage. This work is supported by National Natural Science Foundation of China (No. 51407017).