Neglecting the influence of geographical adjacency and grid interconnection in distribution network investment allocation causes a problem. To solve this an optimization method of distribution network investment based on shadow price and a spatial error model is proposed. First, an evaluation system consisting of the bottom level indicators and the target level indicators is established. Then the optimal solution and shadow price of each bottom level indicator is established using the solution method of the optimization problem. On this basis, the comprehensive score of the distribution network is obtained by combining the weight of each level indicator. The spatial error model is introduced and the investment benefit calculation model is constructed according to the comprehensive score results. With the highest score as the goal, the investment allocation scheme with the maximum benefit can be obtained through optimization. This paper takes the actual data of the distribution network in five areas of Guizhou Province as an example to allocate investment. The results show that the investment allocation scheme is in line with the development of the distribution network in different regions and can maximize the investment benefit. This work is supported by the National Natural Science Foundation of China (No. 51777142) and the Special Research Project of Power Planning of Guizhou Power Grid Co., Ltd. (No. 060000QQ00190011).