There are problems of large differences in the dimensions of multiple indicators and low optimization efficiency in the optimization objectives of the existing distribution terminal configuration model. Thus a bi-level optimization method of distribution terminal configuration is proposed. First, the types of distribution terminals and the reliability calculation of a distribution system containing distribution terminals are analyzed. Secondly, the bi-level optimization model of distribution terminal configuration is established. The upper level optimization model aims at minimizing distribution terminal configuration cost and establishing the installation positions of distribution terminals. The lower level optimization model is used to determine the installation types of distribution terminals with the goal of minimizing outage loss cost. Then, the solution of the bi-level optimization model is given. The upper level optimization model is solved by a binary particle swarm optimization algorithm which is easy to implement, and the lower level optimization model is solved by a firefly algorithm which has few preset parameters and high optimization efficiency. Finally, the reasonability and effectiveness of the proposed bi-level optimization model and solution method are verified by IEEE RBTS BUS2. This work is supported by National Natural Science Foundation of China (No. 51467012) and Science and Technology Project of State Grid Corporation of China (No. 52182519000F).