To improve the reliability of power supply of a distribution network, an optimal distribution terminal layout method considering the automatic fault handling process of feeders is proposed. First, taking the self-adaptive integrated feeder automation (FA) mode as an example, the whole process of fault location, isolation and power restoration of FA is analyzed, and the action signal logic model of the distribution terminal is established based on the power system simulation software DIgSILENT. Second, considering the automatic fault handling process of the feeder, the total load power outage loss cost including the fault area and non-fault area is calculated, and the total investment cost of the distribution terminal constitutes the objective function of the model. Taking the constraints of the average power supply availability index of the system into account, the optimal arrangement model of distribution terminals is established. Then, the optimal total number of installations of distribution terminals is determined based on the artificial bee colony algorithm based on integer coding. The optimal configuration scheme of distribution terminals is formulated, and the distribution terminal optimal site selection is calculated. Finally, taking a 10 kV distribution network in Jibei as a simulation example, the whole process of automatic fault handling of a feeder is simulated in DIgSILENT to verify the effectiveness and applicability of the proposed method.